INVENTORY MANAGEMENT PRACTICES OF MANUFACTURING COMPANY IN NEPAL

Abstract

The purpose of this study, "Inventory management performance," aims to fill the educational gap about manufacturing enterprises' inventory management in Nepal. Because there aren't many inventory management research publications in the Nepalese context, this study serves as a basis for further investigation. The secondary data used in the data analysis were taken from the annual reports of three manufacturing companies covering the ten-year period from 2013/14 to 2022/23. The study's primary goal is to analyses Nepalese inventory management practices and firm performance. The purpose of this study's data presentation and analysis is to assess the inventory management situation as it relates to the financial reports covering the fiscal years 2013 through 2023. Analysis of inventory management in relation to the organization's ROA, ROE, and OM position has been undertaken. This study looks at the effects of several inventory metrics, such as the inventory turnover ratio, inventory conversion period, current ratio, and quick ratio, on a manufacturing company in Nepal. The metrics return on equity, return on assets, and operating margin are used to measure the success of the company. The data for this study were analyzed using statistical software such as SPSS and STATA. According to the study, the dependent variables (ROA, ROE, and OM) and independent variables (ITR, current ratio, and quick ratio) have a significant relationship. On the other hand, ROA, ROE and OM have a negative effect with the Inventory Conversion Period (ICP). As per the study's findings, inventory management significantly impacts a company's corporate financial performance. Hence, it is essential for firms to maintain proper inventory levels to boost their profitability and minimize the expenses incurred by holding excess stock in their warehouses. In accordance with the study's conclusions, businesses are advised to adopt cutting-edge manufacturing technologies that optimize output speed and reduce the time it takes to convert inventories, hence increasing inventory turnover and profitability.