EVALUATING THE ROLE OF WORKING CAPITAL MANAGEMENT IN ENHANCING PROFITABILITY OF PHARMACEUTICAL ENTERPRISES

Abstract

Working capital management (WCM) plays a critical role in ensuring the financial health and operational efficiency of firms, particularly in the pharmaceutical industry, where continuous innovation, regulatory compliance, and high research and development costs drive liquidity needs. Effective management of current assets and liabilities directly influences profitability by optimizing cash flow, reducing financing costs, and sustaining uninterrupted production and distribution. This study evaluates the role of working capital management in enhancing the profitability of pharmaceutical enterprises, with a focus on listed firms. By analyzing components such as inventory turnover, accounts receivable, accounts payable, and cash conversion cycles, the research highlights the link between WCM practices and profitability indicators including return on assets (ROA), return on equity (ROE), and net profit margin. The findings underscore that efficient working capital policies not only improve financial performance but also provide a competitive edge in a highly dynamic and regulated industry.