Impact of Working Capital Management on Profitability (A Case Study of National Thermal Power Corporation Ltd.)

Abstract

Working capital is an important issue during financial decision making since its being a part of investment in asset that requires appropriate financing investment. This study has examined the influence of working capital management on corporate profitability. For assessing the impact of working capital management on profitability of National Thermal Power Corporation Ltd. during the period of 10 years i.e. from 1999-2000 to 2008-09 Pearson's coefficient of correlation and multiple regression analysis between some ratios relating to working capital management and the important measure relating to profitability ratio (ROI) have been computed and applied. An attempt has also been undertaken for measuring the sensitivity of return on investment (ROI) to changes in the level of working capital, working capital leverage (WCL) has been computed and applied.