Impact of Economic Conditions on Working Capital Efficiency of Multinational Pharmaceutical Companies
Journal Title: IOSR journal of Business and Management - Year 2018, Vol 20, Issue 3
Abstract
Tithe study investigated the impact of boom period, recession period and recovery period on the management of working capital efficiency and its relationship with profitability (ROA) using a sample of BSE Healthcare listed 25 pharmaceutical companies. The study period of 12-years period divided into 3 parts: i) boom period (2004-05 to 2007-08), ii) recession period (2008-09 to 2009-10) and iii) recovery period (2010-11 to 2015-16). Working capital efficiency has been measured in terms of Performance Index (PI), Utilization Index (UI) and Efficiency Index (EI) following the model suggested by Bhattacharya (1997).The study focused on the relationship of boom period, recession period and recovery period on the working capital efficiency. The efficiency index of 21, 19 and 22 of multinational pharmaceutical companies in the boom period, recession period and recovery period is greater than 1 which is normally considered as satisfactory. Though statistically, there is no difference in the management of working capital efficiency during the different economic situations but the comparative analysis of boom period to recession period and recession period to recovery period revealed that 92 percent (i.e. 23/25) of the companies has been affected either in recession period or recovery period. The result showed that the management of majority of the companies did not adapt to economic situations. Though the sales are influenced by situations of time the current assets is primarily a controllable factor should have been adjusted at least in recovery period.
Authors and Affiliations
Prabhpreet Kaur, Dr. Ravi Inder Singh, Dr. Harsh Vineet Kaur
Keywords
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- EP ID EP410068
- DOI 10.9790/487X-2003094151
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