Efficiency in Working Capital Management and Its Relationship with Profitability: Study on the Engineering Sector in Bangladesh.

Abstract

Working capital, though an important element for both short term and long term survival of firms, has not got proper attention until the last couples of years. However, with the recent meltdown in the world economy, the issue of working capital emerges as an important issue and lots of researches are done on how to manage the working capital to make it positively connected with the firms’ performance. Therefore focus goes to the determination of the optimum level of working capital. With data of ten years for each of the ten companies from the engineering sector of Bangladesh, this study explores the current status of the sector in terms of working capital management. It has been found that the management of working capital for the sector is quite positive and working capital contributes significantly toward the profitability.