Relationship between Working Capital Management and Profitability in Context of Manufacturing Industries in Bangladesh

Abstract

This study is an attempt to investigate if there is any relationship between working capital management andprofitability of manufacturing corporations. For this purpose Corporations enlisted with the Dhaka StockExchange has been selected and the analysis covers a time period from year 2005 to 2009. The purpose of thispaper is to figure out if there is statistically significant relationship between the profitability and working capitalmanagement and help explain the necessity of firms optimizing their level of working capital managementefficiency and in that way management taking productive actions to maximize their profitability. The result ofthis study clearly shows that except for food industry all other selected industries have a significant level ofrelationship between the Profitability Indices and various Working Capital Components. This paper also showsthat the significance level of relationship varies from industry to industry.