Working Capital Management (WCM) and Performance of SMEs: Evidence from India
David K. Chalmers, Luca Sensini, Amit Shan

Abstract
This study analyzes the relationship between working capital and company performance, deepening this relationship for each of the elements that make up working capital. The SMEs analyzed are those present in the IPO index of the Bombay Stock Exchange (BSE) for a total period of six years, from 2012 to 2017 included. Two criteria were used to select companies to be analyzed. Firstly, the companies had to have all the information needed for this study during the reporting period. Secondly, the companies were not part of a group. Based on these criteria, 42 SMEs were analyzed. The analysis highlighted a negative and significant relationship between net working capital (NWC), accounts receivables (AR), and profitability. Conversely, accounts payables (AP) and inventory (INV) are positively related to profitability. The robustness checks confirmed the validity of our outcomes. The results of this study enrich the existing literature, providing further empirical evidence related to the specific context analyzed. In addition, the results can be helpful for Indian SME owners and managers to guide financial decisions on working capital management.

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