Impact of Working Capital Management on Firm's Performance: 2007-2011 Evidence from Steel Industry in India

Working capital management (WCM) is of particular importance when it comes to financial management of any firm. In this research paper, I have focused tried to find out the relationship betweenworking capital management and firm's profitability (through Return on Total Assets)for the steel industry in India. The aim of this paper is to establish a relationship that is statistically significant between profitability measured throughReturn onTotal Assets (ROTA)which is the dependent variable and the independent variables like Cash Conversion Cycle (CCC) and its various components that is No. of days of Account Receivable (A/R), No. of days of Accounts Payable (A/P), No. of days of Inventory (Inv_Days) together with some other exogenous variables like gearing ratio and sales. A sample of 100 steel companies listed on Bombay Stock Exchange (BSE) has been taken for a period of 5 years (2007-2011) that is a total of 500 firm-year observations.