Abstract:
Purpose: The purpose of this study is to find out whether working capital management
effects the performance of automobile industry or not. For every organization, better efficient
WCM is important source of success and going concern. The performance of firm was drive
from profitability of firm. Working capital management is very important now for managing
the current assets and current liabilities. Company may be having great amount of working
capital to boost their company value. According to previous research it has proved that there
is link of working capital with the company performance.
Methodology/sample: This research depends on the 5 year financial statements (2011-2015)
of 3 automobile companies to measure their performance. Basically, the performance is
calculated in term of the profitability by help of return on equity, return on assets and gross
profit margin. Which are considered as dependent variable? The independent variable used to
measure the impact on performance from working capital management were days inventory
outstanding, cash conversion period, days sales outstanding and days payable outstanding.
The information that gathers from company’s financial statement was analyzed with the help
of Views through the descriptive test, unit root test, equation of regression model and Co
integration.
Finding: End Results shows that the bigger days sales outstanding and holding of inventory
is linked to lower the performance of the company and It also proved that there is negative
relation between performance with days sales outstanding, days inventory outstanding and
cash conversion cycle .Study has discovered that there is significant link between days
payable outstanding, days sales outstanding, days inventory outstanding and cash conversion
cycle. Further study has discovered that there is great relation of return on asset, return on
equity with cash conversion cycle, account receivable and days inventory outstanding. As
company pay supplier in long period, even collection of the payment is fast from the
customer and letting stock stay for less time with the company help company to improve
performance. The null hypothesis of gross profit margin is accepted.
