Abstract:
The primary objective of this study is to investigate the moderating effect of the
exchange rate on the relationship between working capital management and a
firm's performance. The data were collected from 22 companies listed under
Consumer Services on Colombo Stock Exchange for 2013 to 2022 to pursue this
research. The companies were selected using the simple random sampling
method. The data analysis was performed using the software EViews 12, and
statistical techniques such as descriptive statistics, correlation analysis, and
regression analysis were integrated into this study. The output exhibited that
the Cash Conversion Cycle has a significant and negative influence on Return on
Assets in regression models one and two, which means that shorter the cash
conversion cycle better the performance of firms. Therefore, hypothesis one is
accepted. Also, the positive and insignificant nature of the moderating variable
of the Exchange Rate multiplied by the Cash Conversion Cycle shows that
Exchange Rate does not affect the relationship between Cash Conversion Cycle
and the firm's Return on Assets. It was concluded that the exchange rate does
not have moderating effect on the relationship between working capital
management and firm performance.
