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Working Capital Management and Profitability: Evidence from Selected Steel Manufacturing Companies in India

Author

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  • Simranjeet Singh

    (Assistant Professor, Department of Commerce & Management, Guru Nanak College, Budhlada, Mansa, Punjab, India)

  • Harwinder Kaur

    (Assistant Professor, Department of Commerce, Khalsa College for Women, Sidhwan Khurd, Ludhiana, Punjab, India)

Abstract

This research study explores the relationship in the midst of Working Capital Management components and the profitability of steel manufacturing companies in India. The investigation is done putting down four different hypotheses. The sample units include 40 steel manufacturing companies operating in Indian market; the companies were selected using convenience random sampling. The variables were collected from 2004 to 2016. The relationship between variables have been established by framing the panel data and checked using descriptive analysis, Pearson correlation and regression line on E-Views 8 statistical software. The study results exhibit that there is a significant relationship between dependent variables (Net Profit and Return on Assets) and independent variables. It was found that receivables collection period, inventory holding period and Cash Conversion Cycle had symbolic impact on the profitability of companies. Working Capital Management is one of the vital areas of management, and has a noteworthy impact on the profitability of company. Indian steel manufacturing companies should reduce their Cash Conversion Cycle; hence cash conversion has negative significant relationship with net profit.

Suggested Citation

  • Simranjeet Singh & Harwinder Kaur, 2017. "Working Capital Management and Profitability: Evidence from Selected Steel Manufacturing Companies in India," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 8(2), pages 73-79, May.
    • Handle: RePEc:aii:ijcmss:v:08:y:2017:i:2:p:73-79
    DOI: 10.18843/ijcms/v8i2/10
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    References listed on IDEAS

    as
    1. Marc Deloof, 2003. "Does Working Capital Management Affect Profitability of Belgian Firms?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(3‐4), pages 573-588, April.
    2. Marc Deloof, 2003. "Does Working Capital Management Affect Profitability of Belgian Firms?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(3-4), pages 573-588.
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