Working capital management and its impact on liquidity &profitability: an empirical study of Britannia Industries

Among all the problems of financial management, the problems of working capital management have probably been recognized as the most crucial one. It is because of the fact that working capital always helps a business concern to gain and strength. An efficient Working capital management is a vital component of success and survival for small and growing business.

The objectives of the study are to examine the working capital performance and its impact on liquidity and profitability of Britannia Industries during the period 2000 to 2013. Different financial ratios and statistical techniques are also applied for measuring the working capital efficiency and to know the relationship between liquidity and profitability of the selected firm during the study period.

Quick ratio, Inventory turnover ratio, Debtors turnover ratio, Gross profit ratio, and Working capital turnover ratios showed satisfactory performance and Current ratio, Absolute liquid ratio, Operating profit ratio of the company were not found to be satisfactory. The correlation coefficient between liquidity and profitability of the selected company is observed to be 0.2516.