The Impact of Cash Conversion Cycle on Profitability of the Firms with Respect to S&P BSE SENSEX India

Abstract

Cash Conversion Cycle (CCC) is a crucial tool that influences the firms’ short-term requirements. CCC affects the liquidity requirements of every company, every nature of the business, and every size of the business. In this setting, the present research explores the different aspects of CCC and its influence on profitability related to non-financial companies of the S&P BSE (Bombay Stock Exchange) SENSEX Index in India during 2006-2020. Investigating the factors that affect the CCC and statistically significant impact on firms' profitability across the nature of the business and size of the business is the main focus of this research. The results of this research that significant negative relation observed between CCC and profitability of the firm in more classifications (Teruel & Solano 2007, Garcia 2011, and Nobance et al. 2011) and shorter length of cash conversion cycle increase the profitability of the firm (Manyo 2013 and Ajanthan & Kumara 2017). It is also concluded that this research that results would differ in different nature of the business (Padachi 2006) and different size of the business.