Enhancing Firm Performance Through Effective Working Capital Management: A Study of Indian Manufacturing Firms Listed at S&P BSE 500

Abstract
The Covid-19 epidemic had a significant and far-reaching effect on the worldwide economy. The circumstances have led to the degradation of financial markets, significant decreases in household consumption, the transmission of diminished demand to various industries and economies worldwide, and substantial shrink in business sales. Consequently, firms have experienced a substantial decline in their overall performance. As the proper administration of money plays a crucial role in the success of enterprises. Consequently, it is critical to investigate the connection between working capital management and manufacturing firms’ success. This research investigates the correlation between several aspects of working capital management and the performance of Indian manufacturing companies listed on the S&P BSE 500, utilizing Tobin’s Q as a measure. The study included correlation and regression analytic techniques. The study’s findings indicate that both Inventory Conversion Period (ICP) and Accounts Receivables Period (ARP) have a negative impact on the business’s worth, as evaluated by Tobin-Q (TQ). Conversely, Cash Conversion Cycle (CCC) and (Accounts payable period) APP have a positive effect on the financial performance of the organization. Furthermore, the study indicates that efficient management of working capital can improve business performance, leading to the attainment of sustainable development goals. This study’s findings are highly valuable for financial managers, policy-makers, academics, investors, and other government bodies.
Keywords: Accounts Payable Period, Accounts Receivables Period, Cash Conversion Cycle, Inventory Conversion Period, Tobin-Q, Working Capital Management.

Author(s): Syed Noorul Shajar*, Kashif Beg, Mohammad Kashif, Mohsin Khan, Shahrukh Saleem, Faisal Usmani
Volume: 5 Issue: 3 Pages: 661-669
DOI: https://doi.org/10.47857/irjms.2024.v05i03.0806