An empirical examination of working capital management strategy in paper manufacturing companies

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Abstract

This study examines the working capital management practices of four Indian paper manufacturing companies Seshasayee Paper, South India Paper, Andhra Paper, and JK Paper focusing on financial performance metrics from 2017–2018 to 2021–2022. Using purposive sampling based on higher cash and bank balances, the study applies analytical tools such as frequency distribution, descriptive statistics, and analysis of variance (ANOVA) to evaluate data from the companies’ annual reports. Key financial ratios, including the current ratio, quick ratio, inventory turnover ratio, and debtor turnover ratio, were analysed to assess liquidity and operational efficiency (Yogendrarajah & Thanabalasingam, 2011) The findings reveal significant disparities in financial management practices: Seshasayee Paper maintained a standard quick ratio, South India Paper excelled in current and quick ratios, while JK Paper faced challenges with a negative working capital cycle and lower liquidity ratios. ANOVA tests indicated significant differences in financial ratios, except for inventory turnover. These results highlight the need for companies with lower liquidity ratios to reassess their financial strategies. The study emphasizes the importance of tailored financial approaches to improve operational efficiency and sustainability in the paper industry. Future research could benefit from qualitative methods and broader sectoral comparisons.

Keywords: Working Capital, Paper Industry, Economy Development, Current Ratio

Authors’ individual contribution: Conceptualization — S.V.; Methodology — S.V.; Formal Analysis — A.M.A. and S.V.; Investigation — A.M.A. and N.Q.K.; Data Curation — A.M.A. and F.M.D.; Writing — Original Draft — S.V. and M.A.S.; Writing — Review & Editing — A.M.A. and S.V.; Visualization — A.M.A., S.V., and Y.Y.F.; Supervision — A.M.A.; Project Administration — A.M.A.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G34, M4, M41, M42

Received: 10.03.2024
Revised: 29.05.2024; 03.10.2024; 28.02.2025
Accepted: 10.03.2025
Published online: 13.03.2025

How to cite this paper: Abdulkareem, A. M., Krmln, N. Q., Daham, F. M., Vasani, S., Swadi, M. A., & Faris, Y. Y. (2025). An empirical examination of working capital management strategy in paper manufacturing companies [Special issue]. Corporate & Business Strategy Review, 6(1), 402–411. https://doi.org/10.22495/cbsrv6i1siart16