The study examined the impact of working capital investment policies on the WC efficiency index in different economic situations and was based on the premise that despite having a mathematical difference in the working capital efficiencies of domestic and multinational pharmaceutical companies (DPCs and MNPCs), statistically there was no significant difference between the different periods. The analysis revealed that the majority of the companies had been practicing an aggressive working capital investment policy. Similarly, the difference between the efficiencies and investment policies of DPCs and MNPCs was also not statistically significant. The regression coefficients found in the study provide directions to managers to reduce the ratio of aggressive investment policy and conservative investment policy and enhance the working capital efficiency during the boom period. The negative coefficients of correlation also supplemented this finding. The value of R-square showed that the major variations in the efficiency index during the boom period were caused by investment policies. During recession and recovery periods, because of positive beta coefficients, the management of the DPCs should infuse more investments in current assets.

1. Afeef, M. (2011). Analyzing the impact of working capital management on the profitability of SME’s in Pakistan. International Journal of Business and Social Science, 2(22), 173–183.
2. Ahmed, Z., Awan, M. Z., Safdar, M. Z., Hasnain, T., & Kamran, M. (2016). A nexus between working capital management and profitability: A case study of pharmaceutical sector in Pakistan. International Journal of Economics and Financial Issues, 6(3S), 153–160. https://www.econjournals.com/index.php/ijefi/article/view/2624
3. Ali, A., & Ali, S. A. (2012). Working capital management: Is it really affects the profitability? Evidence from Pakistan. Global Journal of Management and Business Research, 12(17), 75–78. https://www.journalofbusiness.org/index.php/GJMBR/article/view/816
4. AL-Shubiri, F. N. (2011a). Determinants of changes dividend behavior policy: Evidence from the Amman Stock Exchange. Far East Journal of Psychology and Business, 4(1), 1–15. https://EconPapers.repec.org/RePEc:fej:articl:v:4b:y:2011:i:1:p:1-15
5. AL-Shubiri, F. N. (2011b). The effect of working capital practices on risk management: Evidence from Jordan. Global Journal of Business Research, 5(1) 39 – 54.
6. Altaf, N., & Ahmad, F. (2019). Working capital financing, firm performance and financial constraints: Empirical evidence from India. International Journal of Managerial Finance,15(4), 464–477. https://doi.org/10.1108/IJMF-02-2018-0036
7. Baker, H. K., Kumar, S., Colombage, S., & Singh, H. P. (2017). Working capital management practices in India: Survey evidence. Managerial Finance, 43(3), 331–353. https://doi.org/10.1108/MF-07-2016-0186
8. Bhattacharya, H. (1995). Total management by ratios: An integrated approach. SAGE Publications.
9. Boțoc, C., & Anton, S. G. (2017). Is profitability driven by working capital management ? Evidence for high-growth firms from emerging Europe. Journal of Business Economics and Management, 18(6), 1135–1155. https://doi.org/10.3846/16111699.2017.1402362
10. Chiou, J. R., Cheng, L., & Wu, H. W. (2006). The determinants of working capital management. Journal of American Academy of Business, 10(1), 149 – 155.
11. Enqvist, J., Graham, M., & Nikkinen, J. (2013, August 13). The impact of working capital management on firm profitability in different business cycles: Evidence from Finland. https://dx.doi.org/10.2139/ssrn.1794802
12. Ghosh, D. S. K., & Maji, S. G. (2004). Working capital management efficiency: A study on the Indian cement industry. The Management Accountant, 39(5), 363 – 372.
13. Goel, U., Bansal, N., & Sharma, A. K. (2015). Impact of corporate governance practices on working capital management efficiency: A structural equation modelling approach. Indian Journal of Finance, 9(1), 38 – 48. https://doi.org/10.17010/ijf/2015/v9i1/71534
14. Hamel, G., & Välikangas, L. (2003). The quest for resilience. Harvard Business Review, 81(9), 52–63. https://hbr.org/2003/09/the-quest-for-resilience
15. Haron, R., & Nomran, N. M. (2016). Determinants of working capital management before, during, and after the global financial crisis of 2008: Evidence from Malaysia. The Journal of Developing Areas, 50(5), 461 – 468. https://doi.org/10.1353/jda.2016.0029
16. Ikpefan, O., Folashade, O., & Agwu, E. (2014). Working capital management and profitability of the manufacturing sector: An empirical investigation of Nestle Nigeria PLC and Cadbury Nigeria PLC. European Journal of Business and Social Sciences, 3(6), 23–34.
17. Jain, P., & Godha, A. (2014). Impact of working capital management on efficiency, liquidity and profitability of Lupin Limited: A case study. Productivity, 55(2), 219–226.
18. Kapil, S. (2011). Financial management. Pearson Education.
19. Kasiran, F. W., Mohamad, N. A., & Chin, O. (2016). Working capital management efficiency: A study on the small medium enterprise in Malaysia. Procedia Economics and Finance, 35, 297–303. https://doi.org/10.1016/S2212-5671(16)00037-X
20. Kaur, H. V., & Singh, S. (2013a). Managing efficiency and profitability through working capital: An empirical analysis of BSE 200 companies. Asian Journal of Business Management, 5(2), 197–207.
21. Kaur, H. V., & Singh, S. (2013b). Managing working capital efficiency in capital goods sector in India. Global Business Review, 14(2), 343–355. https://doi.org/10.1177/0972150913477526
22. Kesimli, I. G., & Günay, S. G. (2011). The impact of the global economic crisis on working capital of real sector in Turkey, Business and Economic Horizons, 4(1), 52–69. https://doi.org/10.15208/beh.2011.5
23. Kwenda, F., & Holden, M. (2014). Determinants of working capital investment in South Africa: Evidence from selected JSE-listed firms. Journal of Economics and Behavioral Studies, 6(7), 569–580. https://doi.org/10.22610/jebs.v6i7.518
24. Lyngstadaas, H., & Berg, T. (2016). Working capital management: Evidence from Norway. International Journal of Managerial Finance, 12(3), 295 – 313. https://doi.org/10.1108/IJMF-01-2016-0012
25. Manjhi, R. K., & Kulkarni, S. R. (2012). Working capital structure and liquidity analysis: An empirical research on Gujarat textiles manufacturing industry. Indian Journal of Finance, 6(8), 25–35. http://www.indianjournaloffinance.co.in/index.php/IJF/article/view/72400
26. Mathur, S. B. (2002). Working capital management and control: Principles and practice. New Age International.
27. Mbawuni, J., Mbawuni, M. H., & Nimako, S. G. (2016). The impact of working capital management on profitability of petroleum retail firms: Empirical evidence from Ghana. International Journal of Economics and Finance, 8(6), 49–62. https://doi.org/10.5539/ijef.v8n6p49
28. Nazir, M. S., & Afza, T. (2009). Impact of aggressive working capital management policy on firms’ profitability. IUP Journal of Applied Finance, 15(8), 19 – 30.
29. Pais, M. A., & Gama, P. M. (2015). Working capital management and SMEs profitability: Portuguese evidence. International Journal of Managerial Finance, 11(3), 341–358. https://doi.org/10.1108/IJMF-11-2014-0170
30. Prasad, P., Sivasankaran, N., Paul, S., & Kannadhasan, M. (2019). Measuring impact of working capital efficiency on financial performance of a firm: An alternative approach. Journal of Indian Business Research, 11(1), 75–94. https://doi.org/10.1108/JIBR-02-2018-0056
31. Raheman, A., & Nasr, M. (2007).Working capital management and profitability – Case of Pakistani firms. International Review of Business Research Papers, 3(1), 279 – 300.
32. Ramachandran, A., & Janakiraman, M. (2009). The relationship between working capital management efficiency and EBIT. Managing Global Transitions, 7(1), 61–74.
33. Ramiah, V., Zhao, Y., & Moosa, I. (2014). Working capital management during the global financial crisis: The Australian experience. Qualitative Research in Financial Markets, 6(3), 332–351. https://doi.org/10.1108/QRFM-09-2012-0026
34. Ray, K. K. (2014). Efficiency of working capital management and profitability: A case of Hindalco. Review of Management, 4(1/2), 19–30.
35. Simon, S., Sawandi, N., & Abdul-Hamid, M. A. (2017). The quadratic relationship between working capital management and firm performance: Evidence from the Nigerian economy. Journal of Business and Retail Management Research, 12(1), 94–108. https://jbrmr.com/cdn/article_file/content_62577_17-10-04-21-51-16.pdf
36. Singh, H. P., & Kumar, S. (2014). Working capital management: A literature review and research agenda. Qualitative Research in Financial Markets, 6(2), 173–197. https://doi.org/10.1108/QRFM-04-2013-0010
37. Taani, K. (2012). Impact of working capital management policy and financial leverage on financial performance: Empirical evidence from Amman stock exchange-listed companies. International Journal of Management Sciences and Business Research, 1(8), 10–17. https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.1037.9331&rep=rep1&type=pdf
38. Van Horne, J., & Wachowicz, J. (2008). Fundamental of financial management. Pearson Education.
39. Wang, Z., Akbar, M., & Akbar, A. (2020). The interplay between working capital management and a firm’s financial performance across the corporate life cycle. Sustainability, 12(4), 1–16. https://doi.org/10.3390/su12041661