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Working Capital Management (WCM) and Firm Performance in Emerging Markets: A Case of Bangladesh

Author

Listed:
  • Rafiqul Bhuyan
  • Mohammad Sogir Hossain Khandoker
  • Noshin Tasneem
  • Mahjuja Taznin

Abstract

We examine the impact of efficient working capital management on market value and profitability. Using secondary data on selected firms from Dhaka Stock Exchange we explore the effects of various working capital components (i.e. cash conversion cycle (CCC), current ratio (CR), current asset to total asset ratio (CATAR), current liabilities to total asset ratio (CLTAR), debt to asset ratio (DTAR), siz,e and growth) to the firm’s performance by looking firm’s value i.e. Tobin’s Q (TQ) and profitability i.e. return on asset (ROA) and return on invested capital (ROIC). Our results show that, for both food and overall manufacturing sectors, there is a significant association between working capital variables and firm’s value & return on assets, but an insignificant association with return on invested capital.

Suggested Citation

  • Rafiqul Bhuyan & Mohammad Sogir Hossain Khandoker & Noshin Tasneem & Mahjuja Taznin, 2021. "Working Capital Management (WCM) and Firm Performance in Emerging Markets: A Case of Bangladesh," Accounting and Finance Research, Sciedu Press, vol. 10(1), pages 1-36, February.
    • Handle: RePEc:jfr:afr111:v:10:y:2021:i:1:p:36
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    References listed on IDEAS

    as
    1. Matthew D. Hill & G. Wayne Kelly & Michael J. Highfield, 2010. "Net Operating Working Capital Behavior: A First Look," Financial Management, Financial Management Association International, vol. 39(2), pages 783-805, June.
    2. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, September.
    3. Ivalina Kalcheva & Karl V. Lins, 2007. "International Evidence on Cash Holdings and Expected Managerial Agency Problems," The Review of Financial Studies, Society for Financial Studies, vol. 20(4), pages 1087-1112.
    4. Edward I. Altman, 1968. "The Prediction Of Corporate Bankruptcy: A Discriminant Analysis," Journal of Finance, American Finance Association, vol. 23(1), pages 193-194, March.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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