Working capital management is a crucial aspect of financial management for any business, including the chemical industry in Bangladesh. Effective management of working capital helps ensure that a company has the necessary liquidity to meet its short-term obligations and pursue its growth objectives. In the chemical industry, working capital management practices can have a significant impact on the performance of firms. This is because the industry is characterized by high fixed costs, long production cycles, and a high degree of inventory and accounts receivable. Therefore, effective management of working capital can lead to improved profitability, increased efficiency, and better cash flow management. In Bangladesh, the chemical industry is an important sector of the economy, contributing significantly to industrial growth and employment. The sector has experienced rapid expansion in recent years, with new entrants and increased competition. However, many firms in the industry face challenges related to working capital management, including inadequate financing options, high inventory levels, and slow collections from customers. To address these challenges, chemical firms in Bangladesh can adopt several working capital management practices, such as optimizing inventory levels, improving collections from customers, and negotiating better payment terms with suppliers. These practices can help improve the cash conversion cycle and increase the firm's liquidity, which can lead to improved financial performance. In addition, chemical firms can also leverage technology and automation to improve their working capital management practices. For instance, they can use software to monitor inventory levels and streamline the collection process, reducing the risk of inventory stockouts and late payments from customers. Overall, effective working capital management is essential for the success of chemical firms in Bangladesh. By adopting best practices and leveraging technology, firms can improve their financial performance and maintain a competitive edge in the market.

1. Working Capital Management Practice
and its Impact on Chemical Industry
Performance of Bangladesh

2. Md. Asifur Rahaman 2123021023
01.
Md. Shariful Islam 2123021029
02.
Md. Muniruzzaman 2123021043
03.
Jahid Khan Rahat 2123021047
04.
Md. Shahajalal Mia 2123021049
05.
Moutushi Roy 2123021054
06.
Group Member

3. Chemical Industry

4. Broad Objective
Impact of Working Capital Management on Profitability of
Chemical Companies in Bangladesh
01.
Specific Objectives
02.
 Working capital practice of chemical companies
 Working capital Management Techniques of chemical companies
 Impact of profitability of chemical companies.
Objectives

5. Research Question
 What is the impact of working capital management on the profitability of
chemical companies in Bangladesh?
 How much impact has working capital on the company’s profitability?

6. Hypothesis
𝐻0: There is no significant relationship between working
capital management and profitability
𝐻1: There is a significant relationship between working capital
management and profitability

7. Industry Analysis
01
Ratio
Analysis
02
Funds Flow
Analysis
03
Working
Capital
Budget

8. Methodology
Descriptive
Statistical Tools
Mean, Standard deviation,
minimum, maximum
Inferential
Statistical Tools Regression, multiple regressions

9. Methodology
Sample Size 6 Company * 3 Year= 18 (n)
Sources of Data Secondary data

10. Descriptive
N Minimum Maximum Mean Std. Deviation Variance
ROA 18 .0019 .2710 .073688 .0698120 .005
ROE 18 .0027 .6826 .165948 .1783441 .032
NOC 18 .0016 .2183 .076564 .0629549 .004
ART 18 7.0136 1478.5990 307.665260 447.7785317 200505.613
IT 18 1.4049 14.8402 5.466556 4.5405878 20.617
APT 18 .0038 12.0332 1.585848 2.7622435 7.630
CCC 18 -142.3697 287.7469 86.493972 124.8488111 15587.226
CATA 18 .0600 .8322 .382828 .2409705 .058
CLTA 18 .0432 .6966 .330196 .2069881 .043
Valid N (listwise) 18

11. Descriptive
ROA:
 Mean= 7.34%
 Standard deviation 6.9%
 minimum value =.0019
 Maximum Value = 0.2710
ROE:
 Mean = 0.1659
 Standard deviation=01783
 Minimum= 0.0027
 Maximum Value =0. 6826
The range of the minimum and
maximum value is not very high and
the variance of ROA is 0.005.
The range of the minimum and
maximum value is high and the
variance of ROE is 0.32

12. Descriptive
Account Receivable Turnover:
 Mean=307 days
 SD= 447.77 days
 Minimum =7.01 days
 Maximum =1748.5990 days
Inventory Turnover:
 Mean = 5.46 days
 SD=20.61 days
 Minimum= 1.40 days
 Maximum =14.84 days
The range of the minimum and
maximum value is very much high and
the variance of A/R turnover ratio is
200505.61
The range of the minimum and
maximum value is lower and the
variance is 20.617

13. Descriptive
Account Payable turnover:
 Mean=1.58 days days
 SD= 2.67 days
 Minimum =1.01 days
 Maximum =8.90 days
Cash Conversion Cycle:
 Mean = 86.49 days
 SD=124.84 days
 Minimum= 42.63 days
 Maximum =287.74 days
The industry efficiently maintain the
account payable turnover
From raw material to sell the product
require around 3 month that is
efficient production

14. Descriptive
Current asset to current liabilities
 Mean=0.3828
 SD= 2.67 days
 Minimum =0.058
 Maximum =0.8322
Current liabilities to Total Asset:
 Mean = 0.3301
 SD=0.043
 Minimum= 0.0432
 Maximum =0.6966
Sufficient current asset to meet the
current liabilities
Industry has enough total asset to
encounter liabilities

15. Regression (ROA)
Model Summaryb
Model R R Square Adjusted R
Square
Std. Error of
the Estimate
Change Statistics
R Square
Change
F Change df1
1 .711a .506 .341 .0566862 .506 3.067 6
The value of R-square .506 shows that only 50.6% of the change in ROA is
explained by the independent variables. It means that the explanation power
of R is in a good level. The F-statistic value is 3.067 and is significant at the
level of 1%.The adjusted R-square value is 34.1%.

16. Regression (ROA)
Sum of Squares df Mean Square F Sig.
.059 6 .010 3.067 .030b
.058 18 .003
.117 24
a. Dependent Variable: ROA
b. Predictors: (Constant), CLTA, APT, IT, CATA, CCC, ART
Combinations of variables are in positively related and it is in
significant level as it is below than 0.1.

17. Regression (ROE)
Model Summaryb
Model R R
Square
Adjusted R
Square
Std. Error of
the
Estimate
Change Statistics
R Square
Change
F
Change
df1
1 .740a .547 .396 .1385874 .547 3.624 6
The value of R-square 0.122 shows that only 12.2% of the change in ROE is explained
by the independent variables. It means that the explanation power of R is in a good
level.
The F-statistic value is 3.624 and is significant at the level of 1%.The adjusted R
square value is 39.6%.

18. Regression (ROE)
Model Summaryb
Model
Change Statistics
Durbin-Watson
df2 Sig. F Change
1 18a .016 2.134
a. Predictors: (Constant), CLTA, APT, IT, CATA, CCC, ART
b. Dependent Variable: ROE
ROE has negative relationship with CLTA, APT, IT. CATA, CCC
and ART at the significance level of 1.6%.

19. Regression (NWC)
Model Summaryb
Model Change Statistics Durbin-Watson
df2 Sig. F Change
1 18a .000 2.724
a. Predictors: (Constant), CLTA, APT, IT, CATA, CCC, ART
b. Dependent Variable: NWC
Shows that NWC has highly positive relationship with CLTA,
APT, IT. CATA, CCC and ART at the significance level of 1%.

20. Regression (NWC)
ANOVAa
Model Sum of
Squares
df Mean
Square
F Sig.
1
Regression .073 6 .012 9.845 .000b
Residual .022 18 .001
Total .095 24
a. Dependent Variable: NYC
b. Predictors: (Constant), CLTA, APT, IT, CATA, CCC, ART
It can be seen that the significant level in Anova table shows that
the combinations of variables are in highly positively related as it
is in significant level as it is below than 0.1.

21. Investment Policy
• They are following aggressive
investment policy
• It means the company is maintaining
lower level of current assets like cash,
marketable securities, account
receivable and inventories.
• Those Company financed less from short
term debt sources. Its maximum
financing is from long term debt
sources.

22. Investment Policy
• Those company are following
conservative investment policy.
• It means those company are
maintaining greater level of liquidity
comparing with the three other firms.
• Those company are maintaining higher
level of current assets.
• So they taking lower risk as they have
more current assets and cost of capital

23. Recommendation
 Working Capital Management has a significant impact on profitability
 Longer Cash Conversion Cycle have negative impact on Profitability
 Longer credit period for the firms to realize higher profitability
 Longer the accounts payable, the better the profitability
 A decent account payable cycle and raceable cycle create a good image
 The chemical companies should have to invest more on current assets or raw
materials
 They should stock more inventories for the uncertainty of stock out risk.