ASunnykumar
VJaya Prasad
VVK Lakshmi
Abstract
Working capital management (WCM) is concerned with the problems that arise in attempting to manage current assets and current liabilities. The objective of this work is to investigate the relationship between WCM and the corporate profitability, and liquidity of Indian manufacturing firms for a period of 2009-10 to 2014-15. This paper aims to analyze the effect of working capital management on liquidity and profitability in the manufacturing firms of India. Empirical analysis is attempted in this regard. The variables that are affecting the liquidity and profitability of the firm are identified from the manufacturing firms listed in the database of Centre for Monitoring Indian Economy (CMIE). A total of 1654 companies are selected for analysis. We collect the data from annual audit financial results of the manufacturing firms listed by CMIE. We convert this selected data into the variables which are effecting the efficient management of working capital as well as profitability. Descriptive analysis, correlation analysis and regression analysis are carried out for a given significance level. Based on the outcome of the analysis a model is built. Descriptive analysis shows the maxima, minima, mean and standard deviation of variables considered. The data are analyzed using SPSS Software. From regression analysis it is found that Size, Cash to current asset ratio, Creditors turnover ratio, Debtors turnover ratio, Inventory turnover ratio, and Asset turnover ratio are significant for all industries.
Keywords- working capital, liquidity, profitability, correlation analysis, regression analysis