Working capital management and stock returns: Evidence from top ten Indian steel company limited

Abstract

This study examines the relationship between working capital management and stock returns of Indian Steel Co. Limited, aiming to assess how efficiently managing short-term financial resources influences market performance. The research is based on secondary data collected from the company’s financial statements and stock price records over a selected study period. Key indicators of working capital management, including inventory period, receivables collection period, payables deferral period, and cash conversion cycle, are analyzed to evaluate their impact on stock returns. The study employs descriptive statistics, correlation analysis, and multiple regression techniques to determine the nature and significance of these relationships. The findings reveal that inventory and receivables periods have a negative effect on stock returns, while the payables period shows a positive influence. The cash conversion cycle emerges as a significant determinant of market performance. The study concludes that efficient working capital management plays a crucial role in enhancing liquidity, profitability, and shareholder value in the steel industry.