Abstract:
The efficient management of working capital could detennine profitability. liquidity
and solvency. value added levels and the ultimate organic grov.1h state of enterprises.
Inefficiencies associated with working capital management could make an adverse
impact on the growth trajectory. The present study examines the impact of efficient
working capital management on the ultimate dynamic of organic groW1h of the
Dirisavi Board listed finns in Sri Lanka. In order to determine the efficiency of
Working Capital Management. three indexes have been used including Perfonnance
Index (PI), Utilization Index (UI) and Efficiency Index (EI). The statistical samples
of the study are the firms accepted in 4 sectors and a total number of 25 finns were
selected as the sample. The study period was 04 years commencing from January
2009 to December 2012. To measure the relationship between efficient working
capital management and organic growth. the researcher used seven independent
variables and nine dependent variables. Reb'fession, correlation and Anova (GLM)
methods of analysis was employed to analyze data. The study found that there were
relationships between efficient working capital management and the contributory
variables along growth pathways of listed firms in Sri Lanka. The degree of
relationship between efficient working capital management and organic growth was
dissimilar among sectors. Further working capital policy and strategy which
encompassed the inventory conversion period, debtors and creditors conversion
periods culminating in the cash conversion cycle wcre all equal predictors of organic
growth. The current assets to total assets ratio : used as a control variable. made a
contribution to ultimate organic groW1h. This study would help to understand the
importance of efficient working capital management. which sectors organic groW1h is
highly effected and how the working capital components contribute to organic
growth of the firms.
