Working Capital Management and its Impact on the Pharmaceutical Company Performance

Effective working capital management allows company to gain a competitive advantage and increase shareholder wealth. In the long run, effective working capital management pursues one global goal - increasing the value of a company. But, nevertheless, an optimistic long-term outlook becomes insignificant if control is lost in the short term perspective. The relevance of the problem of effective working capital management is covered in a study by Smith (1973). Sometimes it is the omissions in the field of short-term financial management (working capital management) lead companies to negative consequences, and sometimes bankruptcy. The pharmaceutical industry has also experienced problems with short-term financial management. Experts say that companies in the pharmaceutical industry pay less attention to issues related to working capital than companies in other industries, and therefore this has a negative impact on the effectiveness of their activities. The object of this study is the working capital of Russian companies in the pharmaceutical industry, analyzed for the period from 2013 to 2017. The purpose of the article is to establish the relationship and the degree of influence of the elements of working capital and the efficiency of the pharmaceutical industry. During the regression study, a linear relationship was established between the payables turnover period and the company's efficiency. As well as the revealed quadratic dependence showed that there is an optimal level of working capital at which the company maximizes profits. The results obtained during the study are of great practical value for the management and strategic development of the company. They can be used when making management decisions in the field of working capital.