Does Working Capital Management Impact How Well a Company Performs? Panel Data Analysis on the Textile Industries of Bangladesh

Abstract

Managing working capital is vital to the expansion and development of manufacturing companies. The performance of Bangladeshi textile industries and the implications of working capital management are the main focus of this study. Working capital is represented by the inventory conversion period, receivable collection cycle, payable deferral cycle, and cash conversion cycle, whereas firm performance is determined by ROA. From 2013 to 2022 ten years panel data were collected from the annual reports of ten listed textile companies of Bangladesh. Panel Least Square (PLS), fixed affect, random effect, and the Hausman test were all executed using the STATA program to determine the influence of independent factors on the dependent factor. The ROA of Bangladesh's textile industries was found to be significantly affected by the Inventory Conversion time, Receivables Collection time, and Cash Conversion Circle, but not by the Payable Deferral time.