Does Efficiency in Working Capital Management Impact the Overall Performance of Firms? Evidence from India
Kamlesh Kumar,
Kumar Sanjay Sawarni,
Sivasankaran Narayanasamy
Abstract:Using 514 Indian-listed firms for 11 years (2012–2022), this study provides evidence that efficiency in working capital management (WCM) positively influences the overall financial performance (proxied by return on equity [ROE]). WCM impacts each decomposed component as per DuPont analysis, such as profit margin (PM), asset turn (AT), and equity multiplier (EMR). Efficient WCM enhances PM and AT. Sample firms with longer working capital (WC) conversion cycles have higher EMR, indicating that inefficiency in WC… Show more
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