IMPACT OF WORKING CAPITAL MANAGEMENT ON CASH HOLDING

Abstract

Management of working capital is regarded as one of the most essential part of business management. This paper studies the impact of working capital management on the profitability of Telecom industry. The study period of papers is of 5 years i.e. 2010-2015. Both dependent and independent variables are used in this study. Variables used in this study include Return on Assets (ROA) to measure the profitability, Average Collection Period (ACP), Inventory Conversion Period (ICP), Average Payment Period (ACP) and Cash Conversion Cycle (CCC) are used as proxy for working capital management. Debt Ratio, Current Ratio, Sales Growth and Firm Size are used as control variable. The data analysis is carried out for eight telecom industry listed in National Stock Exchange of India. This study is based on secondary data and data are taken for a period of five years i.e. 2010- 2015in order
to calculate all these variables. The research methodology used in this study was descriptive statistics, correlation analysis and ordinary square least regression analysis in order to know the impact of these variables on profitability. The result of correlation analysis shows the ROA has negative relationship with ICP, ACP, CCC and Current ratio while ROA has positive relationship with APP, Debt ratio and Firm size. Telecom sector is one of the major sectors of India. So, the aim of this paper is to provide some useful recommendation for the people responsible for the management of this sector. This study also establishes the basis for future research in this area of business.