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