Impact of Aggressive investment policy on the firm performance (Listed manufacturing companies in Sri Lanka)

Abstract

The working capital management plays an important role for success or failure of firm in business because of its effect on firm’s profitability as well on liquidity. An optimal working capital management is expected to contribute positively to the creation of firm value. To reach optimal working capital management firm’s manager should control the tradeoff between profitability and liquidity accurately. The study sample consists of 20 Manufacturing companies listed in Colombo stock Exchange. Here, Correlation, and Regression are used to analyze the data. According to our results return on equity and Tobin Q have not significant impact on the aggressive investment working capital policy. But correlation analysis had shown strong negative relationship between return on assets and Aggressive investment policy. Therefore we can conclude aggressive investment policy have negative relationship between return on Assets

Key words: Aggressive investment policy, Return on equity, Return on assets, Tobin Q