Nexus between Working Capital Management and Firm Profitability: Evidence from the Cement Industry in Bangladesh

Iqbal Md. Mazharul Islam, Md. Abdullah-Al-Masum, Md. Shafyat Azad

Abstract:

The cement industry has a significant contribution to the economic progress in Bangladesh. The profitability of this industry is significantly dependent on effective working capital management. However, the industry’s profitability is not satisfactory. This research brings to light the profitability and working capital situation of the cement industry, as well as the relationship between the two and if working capital management influences profitability. Ratio analysis, Correlation matrix, and Regression Analysis have been used to show the position of profitability and working capital and the association between these two. The authors used secondary data from the company’s annual reports for this research. According to the findings, the profitability and working capital management positions of the cement companies are not satisfactory. There is a link between working capital management and profitability. Proper working capital management has a beneficial influence on profitability, according to the study.

Keywords:

Cement industry, Profitability, Return on asset, Return on capital employed, Working capital management

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