Journal of Business Studies, Vol.-11, No. 1, 2018 53 Journal of Business Studies JBS-ISSN 2303-9884 Volume - 11, No. 1, pp. 53-70 Working Capital Management and Profitability: An Empirical Investigation of Steel Manufacturing Industry in Bangladesh Rejaul Karim 1 A. S. M. Kamruzzaman 2 Md. Kamruzzaman 3 Abstract The paper attempts to find out the effects of working capital management components on the profitability of steel manufacturing companies in Bangladesh. Data from six DSE listed steel manufacturing companies have been incorporated for the period of 2012-2018. Return on asset (ROA), return of equity (ROE) and earning per share (EPS) have been used as the indicators of profitability and average age of inventory (AAI), average collection period (ACP), average payment period (APP), cash conversion cycle (CCC), current ratio (CR), cash to current liabilities (CTCL), and cash to sales (CTS) are used as the indicators of working capital components. Applying Pearson’s correlation and multiple regression analysis, the results shows that there are significant negative relationship between most the working capital management variables with firm’s profitability except average payment period (APP) which has also been found a negative relations with profitability that contradict with the conventional thought. Thus, the study highlights the importance of working capital management efficiency to the policy making level of manufacturing firms. Financial manager can enhance the profitability of manufacturing firms and ultimately can enhance shareholders’ value through efficient and effective working capital management policy. Therefore, the study concludes that the efficient working capital management is critical for firm’s profitability. Key words: Working capital management, liquidity, profitability, steel industry Introduction orking capital management (WCM) is considered as one of the most important area of managerial finance. Through efficient management of working capital components – current assets and current liabilities, firm can bring a good long-term impact on firm’s financial performances. Working capital is considered as the ‘lifeblood’ capital as it keeps running the basic operations and productivity of the firm (Srinivas, 2013). Working 1 Research Fellow, Institute of Bangladesh Studies (IBS), University of Rajshahi and Lecturer, Department of Business Administration, Varendra University, Bangladesh, Email: rkarimreja@gmail.com. 2 Professor, Department of Finance, University of Rajshahi, Bangladesh, Email: asm.kz.fin@gmail.com. 3 Associate Professor, Institute of Bangladesh Studies, University of Rajshahi, Bangladesh, Email: mkzaman@ru.ac.bd W