The Impact of Cash Conversion Cycle on Firm Performance: Evidence from Indian Automobile Sector

What is it about?

This paper aims to examines the impact of the cash conversion cycle (CC) on the profitability of Indian manufacturing firms while taking into account the exogenous control variables including size, leverage, quick assets, and current ratio. The study employs the OLS regression model to examine the influence of CC on the performance of Indian auto companies during the sample period 2015 to 2022. The findings of our study depart from the conclusions of several previous studies. We find a negative relationship between firm performance and CC, implying that the shorter the CC better the firm performance. However, the relationship between firm performance and CC is statically insignificant. Additionally, the results indicate that the current ratio and quick ratio significantly improves the firm performance, whereas size and leverage reduce the performance of Indian firms. The empirical findings of the study have implications for managers, policymakers, and contribute to the existing body of literature.

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Photo by Eric Prouzet on Unsplash

Photo by Eric Prouzet on Unsplash

Why is it important?

The empirical findings of the study have implications for managers, policymakers, and contribute to the existing body of literature.

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