Impact of Working Capital Management on Profitability: A Study on Indian Telecom Sector

Abstract

Working Capital Management refers to the management of current or short-term assets and liabilities. There are different components of Working Capital, like cash conversion cycle (CCC), average payment period (APP), average collection period, debt ratio, operating cycle. Working Capital also affect the Profitability and liquidity of the firm. Profitability an ability to create excess of revenue over expenses in order to Working Capital Management refers to the management of current or short-term assets and liabilities. There are different components of Working Capital, like cash conversion cycle (CCC), average payment period (APP), average attract and hold investment capital. Four useful measures of the profitability the rate of return on firm’s asset (ROA) the rate of return on firm’s equity (ROE), operating profit margin and net firm income. In this paper an attempt was made to study the impact of Working Capital Management on the Profitability of Telecomm sector. Secondary data is used in this study. The time period for the study was five years (2016-2021). In this two main variables are used to measure the impact of working capital management on the Profitability of telecommunication sector Dependent variable includes Return On Asset (ROA), Independent variable include Average Collection Period(ACP), Average payment Period (APP), Inventory Conversion Period(ICP), Cash Conversion Period(CCC), Debt Ratio.