COMPARATIVE ANALYSIS OF WORKING CAPITAL MANAGEMENT BETWEEN PHARMACEUTICAL AND TEXTILE INDUSTRIES IN BANGLADESH

Abstract

This research is an endeavor to understand and identify the impact of working capital management on firm performance. The present study puts an effort to understand the impact of working capital management on profitability of some Pharmaceutical and Textile firms. This study argues that firm performance is directly affected by the efficient working capital management in the organization. Prior studies have analyzed the impact of working capital components on profitability, thus neglecting the other important variables like aggressive financing policy, aggressive investment policy, liquidity, etc. Therefore, the present study contributes to the existing literature by analyzing the impact of working capital components and working capital policies on the profitability of the sample firms. Average Collection Period, Average Inventories Days, Average payable Period and Cash Conversion Cycle have been used to measure working capital components. Aggressive investment policy and aggressive financing policy have been used to measure working capital policies. The main objective of the present study is to evaluate the comparative analysis of Working Capital Management between Pharmaceutical and Textile industries in some selected companies with emphasizing to examine the trends in working capital in different Pharmaceutical and Textile industries of Bangladesh, and to investigate the effects of working capital components on profitability of Pharmaceutical and Textile industries of Bangladesh. This study mainly followed a quantitative research method. Data were collected from annual reports of selected pharmaceuticals and textile firms in Bangladesh. Total 32 (Thirty Two) sample of 10 (ten) pharmaceuticals and 22 (Twenty two) textile pharms were considered among the top performer and data availability of the firms (Around 40% of DSE listed firms) for five years data for the period from 1st July 2013 to 30th June 2018. Collected data were analyzed by using SPSS, Eviews, and Microsoft Excel. Before data analysis 16 models were put forwards and hypothesis were developed. The present study unifies panel regression techniques to calibrate the efficacy of independent Variables (working capital components and working capital policy) on dependent variable (profitability) of pharmaceuticals firms and textile firms in Bangladesh.

Thus, this study unified the regression models for finding the impact of independent variables on dependent variable. The overall finding revealed that sample firms adopt aggressive financing policy. The study fulfills the objective by investigating the relationship between the working capital components and profitability of the firm. This study finally conclude that pharmaceuticals sector is much more efficient than textile sector in working capital management in Bangladesh.