IMPACT OF WORKING CAPITAL MANAGEMENT ON PROFITABILITY OF MAWMLUH CHERRA CEMENT LIMITED IN MEGHALAYA (Pages 17-51) by Dr. K. C. Biswal in THE INTERNATIONAL MANAGER / ISSN: 2348-9413 (Online); 2348-9405 (Print)

Working capital management plays a significant role in improved profitability of firms. Firms can achieve optimal management of working capital by making the trade-off between profitability and liquidity. Correlation and Ordinary Least Squares regression models were used to establish the relationship between working capital management and firm’s profitability. The study finds a negative relationship between profitability and current ratio, but a positive relationship between profitability and debtor turnover ratio, inventory turnover ratio, Creditor turnover ratio. Moreover, the financial leverage,sales growth, current ratio and firm size also have significant effects on the firm’sprofitability. The management can also create value for their shareholders by increasing their inventories to a reasonable level. Firms can also take long to pay their creditors in as far as they do not strain their relationships with these creditors. Firms are capable of gaining sustainable competitive advantage by means of effective and efficient utilization of the resources of the organization through a carefulreduction of the cash conversion cycle to its minimum. In so doing, the profitability of the firms is expected to increase. Keywords: Working Capital Management, Debtor Turnover Ratio, Creditor Turnover Ratio, Inventory Turnover Ratio, Current ratio, Return on Assets, Manufacturing