Determinants of Working Capital of Indian MSMEs

Presented at International Conference - "Ample Opportunities and Growth Prospects in India” organized by Babasaheb Ambedkar Open University at Ahmedabad – 7th and 8th December, 2019

11 Pages Posted: 8 Jul 2020

See all articles by Sumita J Shroff

Sumita J Shroff

Institute of Commerce, Nirma University

Date Written: December 4, 2019

Abstract

The Indian Micro, Small, and Medium Enterprises are the forerunners in the Indian growth story with a contribution of 29 percent to Indian GDP, 45 percent contribution to exports, and employment generation of 11.10 crores. Further, every business entity needs working capital to facilitate the smooth functioning of its business, revenue generation, and efficient asset utilization. In this context, the current study examined the determinants of working capital of the Indian Micro, Small, and Medium Enterprises over a period of 13 years from 2006-07 to 2018-19. Taking firm size, tangibility, leverage, profitability, sales growth, as determining variables, the results of stepwise regression analysis revealed that firm size and leverage are significant determinants of working capital for firms in Indian MSMEs in the chemical industry.

Keywords: Determinants of Working Capital, Indian MSME Sector, Firm Size, Leverage, Tangibility, Cash Conversion Cycle

JEL Classification: G31, G32

Suggested Citation

Shroff, Sumita J, Determinants of Working Capital of Indian MSMEs (December 4, 2019). Presented at International Conference - "Ample Opportunities and Growth Prospects in India” organized by Babasaheb Ambedkar Open University at Ahmedabad – 7th and 8th December, 2019, Available at SSRN: https://ssrn.com/abstract=3626247 or http://dx.doi.org/10.2139/ssrn.3626247

Sumita J Shroff (Contact Author)

Institute of Commerce, Nirma University ( email )

Ahmedabad, IN 382481
India

HOME PAGE: http://https://commerce.nirmauni.ac.in/author/sumita/

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