Does Working Capital Management Affect Financial Performance: Empirical Evidence of Indian Manufacturing Sector?

Abstract

This research aims to analyse the Working Capital Management affects financial performance in Indian manufacturing sector. This research employs secondary data for data collecting from BSE, which comprises 20-year financial data from 2003 to 2022 using the sample of 419 companies. The study used descriptive statistics, random effects, and fixed effect models to define the sample and evaluate the influence of working capital management on manufacturing industry. Findings suggested that working capital management proxies have a major impact on the financial performance of the company. Proxy of CCC indicates that negative and significant impact of GOP, NPM, and NPR. The coefficient of ICP indicates that negative and significant relation between firm performances. In addition, we discovered a statistically significant inverse relationship between APP and GOP and NPM and NPR, suggesting that the more quickly a company in our sample pays its bills, the less profit it generates. The above table demonstrates that RCP has a positive and significant alliance with GOP. To the best of the author’s knowledge, this paper provides the study to examine the WCM’s effect for firm’s performance and contributes valuable insights on this company’s investors and managers.