Impact of Working Capital Management on Firm’s Profitability in Chemical Industry: A Case Study of Tata Pigment Ltd

ABSTRACT

The present study focuses to appreciate the impact of working capital management on firm’s profitability in chemical industry as it is of paramount to the business. In this paper, we examine the role of working capital management and its impact on the profitability of Tata Pigment Ltd. for fifteen-year period from 2005-06 to 2019-20. The influence of cash conversion cycle and its components on the profitability is tested using the descriptive statistics, correlation analysis, linear regression analysis and analysis of variance. The data analysed is statistically significant and results in an existence of the inverse relationship between the cash conversion cycle and the profitability indicator (ROA). The study further shows a strong negative correlation existing in between the inventory conversion period and overall profitability of the company. We also found that efficient working capital management contributes in the profitability, growth and proper functioning of the company and thus should form a part of financial planning.

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