International Journal of Economics, Finance and Management Sciences

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Relationship Between Working Capital Management Efficiency and Profitability: A Comparative Study on Square Pharmaceuticals Limited and Beximco Pharmaceuticals Limited, in Bangladesh

Received: Jan. 19, 2017    Accepted: Feb. 10, 2017    Published: Mar. 09, 2017
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Abstract

Pharmaceutical is an important adjunct of industrialization in Bangladesh. This paper examines the effects of working capital management efficiency on the profitability of the two leading pharmaceuticals companies of Bangladesh - Square Pharmaceuticals Limited (SPL) and Beximco Pharmaceuticals Limited (BPL) and to make a comparison of financial efficiency between these two firms. The secondary data for a period of ten years (2006-2015) have been analyzed by using correlation, t-test, and different profitability, liquidity and solvency ratios. The study reveals that there is a significant relationship between working capital management efficiency and profitability of both of the firms. The study also finds Square Pharmaceuticals Limited is more efficient in working capital management than Beximco Pharmaceuticals Limited. The financial performance of Beximco Pharmaceuticals Limited should be improved immediately through the efficient management of working capital to increase its profitability.

DOI 10.11648/j.ijefm.20170502.16
Published in International Journal of Economics, Finance and Management Sciences ( Volume 5, Issue 2, April 2017 )
Page(s) 121-128
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Pharmaceuticals Industry, Profitability, Working Capital Management Efficiency, Bangladesh

References
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[2] Van Horne, J. C. and Wachowicz, J. M. (2004). Fundamentals of Financial Management, 12th Edition, Prentice Hall Publishers, New York.
[3] Aktas, N., Croci, E., & Petmezas, D. (2015). Is working capital management value-enhancing? Evidence from firm performance and investments. Journal of Corporate Finance, 30, 98-113.
[4] Rafuse, M. E. (1996). Working capital management: an urgent need to refocus. Management Decision, 34 (2), 59-63.
[5] Kasiran, F. W., Mohamad, N. A., & Chin, O. (2016). Working Capital Management Efficiency: A Study on the Small Medium Enterprise in Malaysia. Procedia Economics and Finance, 35, 297-303.
[6] Abbadi, S. M., & Abbadi, R. T. (2012). The determinants of working capital requirements in Palestinian industrial corporations. International Journal of Economics and Finance, 5 (1), 65.
[7] Salawu, R. O., & Alao, J. A. (2014). Determinants of working capital management: Case of Nigerian manufacturing firms. Journal of Economics and Sustainable Development, 5 (14), 49-56.
[8] Akoto, R. K., Vitor, D. A., Angmor, P. L. (2013), Working capital management and profitability: Evidence from Ghanaian listed manufacturing firms. Journal of Economics and International Finance, 5 (9), 373-379.
[9] Quayyum, S. T. (2011). Effects of working capital management and liquidity: evidence from the cement Industry of Bangladesh. Journal of Business and Technology (Dhaka), 6 (1), 37-47.
[10] Azam, Dr. Muhammad, Haider, Syed Irfan (2011). Impact of Working Capital Management on Firms’ Performance: Evidence from Non-Financial Institutions of KSE-30 index. Interdisciplinary Journal of Contemporary Research In Business, 3 (5).
[11] Gitman, L. J. (2009). Principles of Managerial Finance, 12th Edition, Pearson-Addison Wesley Publishers, New York.
[12] Filbeck, G., & Krueger, T. M. (2005). An analysis of working capital management results across industries. American Journal of Business, 20 (2), 11-20.
[13] Lazaridis, I., & Tryfonidis, D. (2006). Relationship between working capital management and profitability of listed companies in the Athens stock exchange.
[14] Raheman, A., & Nasr, M. (2007). Working capital management and profitability–case of Pakistani firms. International review of business research papers, 3 (1), 279-300.
[15] Sayaduzzaman, M. D. (2007). Working Capital Management: A Study on British American Tobacco Bangladesh Company Ltd. Journal of Nepalese Business Studies, 3 (1), 78-84.
[16] Chowdhury, A., & Amin, M. M. (2007). Working capital management practiced in Pharmaceutical companies in Dhaka stock. BRAC University Journal, Vol. IV, No. 2, 2007, pp. 75-86.
[17] Rahman, M. M. (2011). Working capital management and profitability: a study on textiles industry. ASA University Review, 5 (1), 115-132.
[18] Afza, T., & Nazir, M. S. (2007). Is it better to be aggressive or conservative in managing working capital. Journal of quality and technology management, 3 (2), 11-21.
[19] Carpenter, M. D., & Johnson, K. H. (1983). The association between working capital policy and operating risk. Financial Review, 18 (3), 106-106.
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  • APA Style

    Rejaul Karim, Md. Abdullah Al-Mamun, Md. Tota Miah. (2017). Relationship Between Working Capital Management Efficiency and Profitability: A Comparative Study on Square Pharmaceuticals Limited and Beximco Pharmaceuticals Limited, in Bangladesh. International Journal of Economics, Finance and Management Sciences, 5(2), 121-128. https://doi.org/10.11648/j.ijefm.20170502.16

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    ACS Style

    Rejaul Karim; Md. Abdullah Al-Mamun; Md. Tota Miah. Relationship Between Working Capital Management Efficiency and Profitability: A Comparative Study on Square Pharmaceuticals Limited and Beximco Pharmaceuticals Limited, in Bangladesh. Int. J. Econ. Finance Manag. Sci. 2017, 5(2), 121-128. doi: 10.11648/j.ijefm.20170502.16

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    AMA Style

    Rejaul Karim, Md. Abdullah Al-Mamun, Md. Tota Miah. Relationship Between Working Capital Management Efficiency and Profitability: A Comparative Study on Square Pharmaceuticals Limited and Beximco Pharmaceuticals Limited, in Bangladesh. Int J Econ Finance Manag Sci. 2017;5(2):121-128. doi: 10.11648/j.ijefm.20170502.16

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  • @article{10.11648/j.ijefm.20170502.16,
      author = {Rejaul Karim and Md. Abdullah Al-Mamun and Md. Tota Miah},
      title = {Relationship Between Working Capital Management Efficiency and Profitability: A Comparative Study on Square Pharmaceuticals Limited and Beximco Pharmaceuticals Limited, in Bangladesh},
      journal = {International Journal of Economics, Finance and Management Sciences},
      volume = {5},
      number = {2},
      pages = {121-128},
      doi = {10.11648/j.ijefm.20170502.16},
      url = {https://doi.org/10.11648/j.ijefm.20170502.16},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.ijefm.20170502.16},
      abstract = {Pharmaceutical is an important adjunct of industrialization in Bangladesh. This paper examines the effects of working capital management efficiency on the profitability of the two leading pharmaceuticals companies of Bangladesh - Square Pharmaceuticals Limited (SPL) and Beximco Pharmaceuticals Limited (BPL) and to make a comparison of financial efficiency between these two firms. The secondary data for a period of ten years (2006-2015) have been analyzed by using correlation, t-test, and different profitability, liquidity and solvency ratios. The study reveals that there is a significant relationship between working capital management efficiency and profitability of both of the firms. The study also finds Square Pharmaceuticals Limited is more efficient in working capital management than Beximco Pharmaceuticals Limited. The financial performance of Beximco Pharmaceuticals Limited should be improved immediately through the efficient management of working capital to increase its profitability.},
     year = {2017}
    }
    

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    AU  - Rejaul Karim
    AU  - Md. Abdullah Al-Mamun
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    JF  - International Journal of Economics, Finance and Management Sciences
    JO  - International Journal of Economics, Finance and Management Sciences
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    PB  - Science Publishing Group
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    UR  - https://doi.org/10.11648/j.ijefm.20170502.16
    AB  - Pharmaceutical is an important adjunct of industrialization in Bangladesh. This paper examines the effects of working capital management efficiency on the profitability of the two leading pharmaceuticals companies of Bangladesh - Square Pharmaceuticals Limited (SPL) and Beximco Pharmaceuticals Limited (BPL) and to make a comparison of financial efficiency between these two firms. The secondary data for a period of ten years (2006-2015) have been analyzed by using correlation, t-test, and different profitability, liquidity and solvency ratios. The study reveals that there is a significant relationship between working capital management efficiency and profitability of both of the firms. The study also finds Square Pharmaceuticals Limited is more efficient in working capital management than Beximco Pharmaceuticals Limited. The financial performance of Beximco Pharmaceuticals Limited should be improved immediately through the efficient management of working capital to increase its profitability.
    VL  - 5
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Author Information
  • Department of Business Administration, Varendra University, Rajshahi, Bangladesh

  • Department of Business Administration, Pabna University of Science and Technology, Pabna, Bangladesh

  • Department of Business Administration, Varendra University, Rajshahi, Bangladesh

  • Section