A Study on Working Capital Management in Automotive chassis Manufacturing Pvt Ltd

A Study on Working Capital Management in Automotive chassis Manufacturing Pvt Ltd

I.KARUNA , REG NO (22F11E0018)

Guide: V. HARI KUMAR (Associate Professor)

Department of management studies

Narayana engineering college, Gudur

ABSTRACT

The effective management of working capital is crucial for all companies. Key elements of working capital management include days sales outstanding (DSO), days inventory outstanding (DIO), days payable outstanding (DPO), and cash conversion cycle (CCC). A study conducted on 332 Czech companies, 20 of which were certified by the EFQM (European Foundation for Quality Management) Model, investigated how these components of working capital management impact a company's profitability. Two regression models were utilized for testing - pooled regression and maximum likelihood estimation (MLE). The results indicated that all components of working capital management have a negative effect on profitability. Interestingly, the interaction between EFQM certified companies and working capital components had a positive impact on profitability, suggesting a beneficial relationship between these components and profitability for certified firms. However, it was found that receiving a quality certificate/award from the EFQM Excellence Model actually decreased a company's profitability.

 Keywords

Working capital, Firm profitability CCC, EFQM, Czech firms