Impact of Working Capital Management on Firm’s Profitability: Evidence from the Fuel and Power Companies Listed on the Dhaka Stock Exchange

This study investigated the impact of working capital management on the profitability of fifteen listed fuel and power companies in Bangladesh. The ratios used for this study to measure the working capital efficiency included time interest ratio (TIE), quick ratio (QR), cash conversion cycle (CCC), accounts receivables collection period (ARCP), accounts payable payment period (APP), inventory processing period (IPP), cash to current liability (CCL), cash to sales (CTS) ratios and net working capital (NWC) turnover and debt to equity ratio (D/E). The corporate profitability was measured by return on assets (ROA) and net profit margin (NPM). The data were collected from the annual reports of the companies from 2007 to 2011. Analysis of multiple regression and correlation matrix reveals that measurable association exists between the dependent and selected independent variables. NPM and TIE showed significant positive relations with ROA while CCL and accounts payables payment period (APP) showed a significant positive influence on NPM and D/E exhibited significant negative influence on NPM