A study of working capital management with special reference to BHEL in India

Liquidity and profitability are the two aspects of paramount importance in a business. Liquidity depends on the profitability of business activities and profitability is hard to achieve without sufficient liquid resources. Both the aspects are closely interred related. Working capital is the worm blood passing through the arteries and veins of the business and sets it ticking. Therefore, Working capital is considered to be life-giving force to an economic entity and managing working capital one of the most important functions of corporate management. Working capital management (WCM) is the management of short-term financing requirements of a firm which includes maintaining optimum balance of working capital components – receivables, inventory and payables – and using the cash efficiently for day-to-day operations. The main purposes of this study are to examine and evaluate the working capital management of BHEL, examine the management pattern of inventory, liquidity, cash position and receivables management. This also finds the relationship between Working Capital Efficiency and Profitability, Profitability and Market ratios.