A Critical Study on Impact of Working Capital Management on Profitability of Manufacturing Industry in India (A Study on Paint Industry)
Journal Title: IOSR journal of Business and Management - Year 2018, Vol 20, Issue 2
Abstract
After making a thorough review of literature the observation is that profitability of any firm has significant importance on working capital management of those particular firms which refers to the management of working capital, or to the management of current assets. A firm's working capital consists of its investments in current assets, which includes short-term assets—cash and bank balance, inventories, receivable and marketable securities. Firms can achieve optimal management of working capital by making the trade-off between profitability and liquidity. The profitability liquidity trade off is important because if working capital management is not given due considerations then the firms are likely to fail and face bankruptcy. Working capital management is one of the most important areas while making the comparisons of liquidity and profitability within the firms, involving the decision of the amount and composition of current assets and the financing of these assets. This study explores the impact of working capital management on the profitability of firms in the paint industry. The efficiency of working capital management can been measured by Inventory Turnover Period, Account Receivable Period, Days Payables Outstanding, Current Ratio and Quick assets ratio. This study attempted to fill the research gap by analyzing and test the relationship between the most important working capital variables. There is a positive correlation between some variables like return on assets and inventories maintained and negative correlation between return on assets and average receivable days, average collection period done in the paint industry.
Authors and Affiliations
MS. Vasavi Pravallika, DR. K. S. Sekhara Rao
Keywords
Related Articles
- EP ID EP409663
- DOI 10.9790/487X-2002063747.
- Views 66
- Downloads 0
Effect Of Private Asset Financing Loans On Financial Performance Of Real Estate Investment Firms In Nauru Town, Kenya
There has been an ever-growing demand for housing in Kenya. Though this may spell booming business for real estate financing investments, this has not been the case, at least in in relation to financial performance. The...
The Nexus betweenWorking Capital Management and Financial Performance: A Case of Listed Construction and AlliedFirms in Kenya
Working capital management plays a crucial role in a firm’s success or failure because of its effects on an organization’s financial performance and liquidity. The purpose of this study was to determine the effects of wo...
The Effects of Customer Relationship Management on Customer Services and Customer Loyalty: An Empirical Study of Shopping Malls in Turkey
In recent years, marketing to consumers has become increasingly challenging as the number of available products and services across businesses has grown up significantly, while at the same time marketing strategies and c...
Leaderonomics-Women Leaders and Organizational Effectiveness.
Globalization coupled with the competitive nature of business necessitates collaboration and clear understanding of all principles underlying organizational activities for growth,sustainability and survival of organizati...
Small Medium Business Marketing Through E-Commerce (Theory of Planned Behavior Approach)
Theory of Planned Behavior (Ajzen, 1991) has emerged as one of the most influential and popular conceptual frameworks for studying human action. Human behavior is guided by three types of considerations, namely: attitude...