Impact of Working Capital Management on the Financial Performance of Petroleum Companies

Abstract

The purpose of the research paper is to examine the impact of working capital management on the financial performance of petroleum companies. Working capital is based on current assets and current liabilities and to determining the impact of petroleum companies the variables are linked with dependent and independent variables that are accounts receivable, accounts payable, number of days in inventory, cash conversion cycle and return on equity. A sample of four companies are taken from petroleum sectors. Panel data and Historical data from 2010 to 2014 is used for the calculation of Regression, Correlation, Coefficients and ANOVA testing has been used to estimate the results on the SPSS software. The result found that inventory is significant negative relation to ROE, accounts payable, cash conversion cycle have positive relation to ROE while the account receivable has no significant relation to ROE. ROE is actually showing the overall financial performance of the petroleum companies that which variable is best for the company it shows the results that the variable is positive relation to ROE or it showing negative relation to the ROE.