Assessing Relationship between Working Capital Management and Return on Equity of Islamic Bank Bangladesh Limited

Abstract

This paper is an attempt to investigate the effects of working capital management efficiency as well as effects on the profitability of Islami Bank Bangladesh Limited. The paper tries to find out whether empirical results on the relationship between working capital management practices and profitability of bank like Islamic Bank Bangladesh Limited. The data was collected from secondary sources; this data was mainly collected from published financial statements. This data was over a period of 5 years from 2008 to 2012.The descriptive statistics such as mean and standard deviation were used to measure variations. Correlation and regression analysis were used to analyze the data and testing of hypotheses. This paper found that working capital variables like credits payment period, leverage, growth and credit risk has negative relation with return on equity but there was a positive relation with Cash Conversion Cycle and Debtors collection period. Among six hypotheses only two hypotheses were accepted. It can conclude that there is a relationship with working capital management variables with profitability (ROE uses as a proxy). Keywords