The Impact of Working Capital Management on Profitability of Pharmaceutical Industry in India

The objective of this paper is to examine the impact of working capital management (WCM) on profitability (P) of pharmaceutical industry in India. The investigation is conducted on a panel of 33 firms of the period from 2002-03 to 2011-12 which listed their shares in Bombay Stock Exchange. The impact of (WCM) on (P) is studied using measures viz Quick Ratio (QR), Working Capital Turnover Ratio (WCTR), Debtors Turnover Ratio (DTR), Fixed Assets Turnover Ratio (FATR), Proprietary Ratio (PR), Current Assets to Proprietor's Fund (CA_PF), Solvency Ratio (SR), and Return on Investment (ROI). The study used Multiple Regression Technique besides using descriptive statistics such as Mean and Standard Deviation. The results of the study show that there is a significant effect of WCM in respect of selected predictor variables viz QR, WCTR, DTR, FATR, PR, CA_PF, and SR on P of Pharmaceutical Industry in India for the study period.