Working Capital Management a Measurement Tool for Profitability: A Study on Pharmaceutical Industry in Bangladesh
Journal of Finance and Accounting
Volume 6, Issue 1, January 2018, Pages: 1-10
Received: Nov. 4, 2017; Accepted: Nov. 20, 2017; Published: Jan. 12, 2018
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Md. Amir Sharif, Department of Accounting & Information Systems, Begum Rokeya University, Rangpur, Bangladesh
Md. Rafiul Islam, Department of Accounting & Information Systems, Begum Rokeya University, Rangpur, Bangladesh
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The paper is an attempt to show the relationship between working capital and the profitability function of pharmaceutical industry in Bangladesh. Working capital management as a financial strategy has its effects on liquidity as well as profitability of the firm. To serve the study mostly secondary data have been used of pharmaceutical companies listed in DSE & CSE and data include time series from annual reports of the selected companies. Sample size includes10 selected pharmaceutical companies and their five years annual data. Multiple regression and correlation have been used to analyze the data. To serve the study perspective, this paper considered the working capital indicators such as (Account Receivable Turnover in days, Account payable Turnover in days, Inventory Turnover in days and Cash conversion cycle) as independent variable where as Profitability indicator (Return on Assets) as dependent variable and found there is a significant relationship between the variables studied. Finally the study shows the rejection of Null hypotheses (H0) which mentions that there is significant effect of working capital on firm’s profitability. The inference drawn from the study would be able to provide the basis for rethinking the practices of working capital management for competitive survival.
Working Capital Management, Profitability, DSE, CSE, Conversion Cycle, Hypotheses
To cite this article
Md. Amir Sharif, Md. Rafiul Islam, Working Capital Management a Measurement Tool for Profitability: A Study on Pharmaceutical Industry in Bangladesh, Journal of Finance and Accounting. Vol. 6, No. 1, 2018, pp. 1-10. doi: 10.11648/j.jfa.20180601.11
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