Abstract:
This study investigates the impact of working capital management on firm
performance of public listed companies in food and beverages in the Colombo Stock
Exchange. Working capital is an important element that should be concerned by the
managers, since negligence of it leads to a bankruptcy of the firm. Therefore, it is vital
to identify a proper working capital policy for a firm before it creates troublesome
situation to the company. In this study, a sample of 20 public listed companies from
Food and Beverage sector were selected. Data is taken from annual reports of listed
companies during the period of 2013 to 2017. Descriptive statistics method, Pearson
correlation method and Panel regression method were used to analyse data.
Descriptive statistics revealed current statistics on working capital management of
Food and Beverage industry. Pearson correlation test results revealed that accounts
collection period (ACP), inventory turnover period (ITD), gross working capital
(GTA), current assets to total assets ratio (CATA) and Current liabilities to total assets
ratio (CLTA) have significant correlation with firm performance. As per the panel
regression results, It is found that, gross working capital (GTA) and current assets to
total assets ratio (CATA) have positive significant relationship with return on assets
(ROA).Current liabilities to total assets ratio (CLTA) has a significant negative
relationship with return on assets (ROA).None of the independent variables have
significant relationship with return on equity (ROE).
