Determinants of working capital efficiency of Indian msme's: an empirical evidence

Abstract

This research aims to gather insight into working capital management (WCM) practises and the factors that influence of its efficiency inside the Indian micro small medium enterprises (MSME’s) manufacturing sector using organisation variables by examining two efficiency models, namely cash conversion cycle (CCC).

For the research, the paper used panel regression methodologies on 578 micro small and medium enterprises (MSME’s) of the most important production and manufacturing industries from 2012 to 2021. Several firm-specific variables, including leverage (lever), tangibility (Tangib), firm size (Fsiz), profitability(Prof) , Human capital (HCap), Asset Turnover ratio (ATR), Firm Growth (FG) have significant effect on Working capital management efficiency (WCE), whereas Age of the firm(AGE) and salary expenses (sal) were having insignificant effect on working capital management efficiency. This study explores WCM efficiency comprehensively by including organisation factors in Indian manufacturing MSME’s utilising efficiency metrics, i.e. cash conversion cycle (CCC), the findings of which revealed as the solution to an appropriate Working capital management (WCM).