IMPACT OF WORKING CAPITAL MANAGEMENT PRACTICES ON THE FINANCIAL PERFORMANCE OF INDIAN SMALL-CAP PHARMACEUTICAL COMPANIES

Abstract

The study investigates the impact of working capital management on the financial performance of Indian pharmaceutical companies listed on the BSE platform. Data from CMIE Prowess IQ was used for 34 listed pharmaceutical companies out of 129 possible due to data availability. Companies were categorized by size (market capitalization) and the analysis covers a 10-year period from 2013-14 to 2022-23. The study uses multiple regression to explore how working capital practices such as raw material turnover, WIP turnover, finished goods turnover, debtor's turnover, Creditors turnover, and Current ratio influence return on assets (ROA) while considering factors like company size, Growth, Sales and debt-to-equity ratio. The results shown that the WIP turnover, finished goods turnover, creditors turnover, sales, and growth do not show significant impacts on ROA. These results suggest that while certain WCM practices like debtor’s turnover and debt-to-equity ratio are crucial.