The Efficiency of Working Capital Management in the Energy Sectors in Bangladesh: An Empirical Study on Selected Gas Distribution Companies

Abstract

Management of Current assets and Current liabilities is involved in the working capital management of any business organisation. The financial decision regarding the current assets and their utilisation plays a crucial role in the solvency, liquidity as well as the profitability of the company. The study is aimed to determine the management of working capital of the particular gas distribution companies in Bangladesh which are selected on purposive sampling and analysis are conducted on the secondary data collected from annual reports covering a period of 5 years from the financial year 2015 to 2020.  The analysis techniques of mean, average growth rate, standard deviation, coefficient of variation, financial ratio analysis, and Motaal’s Comprehensive Test of Liquidity model are used. It is found that the working capital management of the gas distribution companies is not at a satisfying level especially for the state-owned companies, although a newborn company (KGDCL) is in a better position compared with the older one. This study focuses on some techniques which may be followed for the management and utilisation of current assets and liabilities in enhancing the profitability of the companies to maintain optimum liquidity and solvency.