Business success depends heavily on the ability of financial managers to effectively manage the components of working capital. A well calculated and employed working capital management is anticipated to add positively to the firm’s performance. The purpose here is to assess the impact of working capital on the financial performance of listed eight Public Sector Companies in India. The study employed panel data regression. In order to estimate the effects of explanatory variables on the financial performance, three estimation models were used namely, pooled ordinary least squares (OLS), random effects model and fixed effects model. The results of the study show that there exists an influence of working capital components on the financial performance of Public Sector Companies as represented by Return on Assets.

KEY WORDS: Working Capital. Financial Performance, Public Sector Companies, Return on Assets, Study Models