Working capital management and profitability -A study of selected firms in India

Working capital management has a great significance for not only the profitability but also the fundamental issue of the very survival of a business. In this backdrop, this paper is an attempt to investigate the relationship between working capital management & profitability of a firm in a broad spectrum of Indian industry. It also tries to gauge the impact of some of the variables of working capital upon the profitability as well as liquidity of firms. Apropos to the analysis, it is found there is an inverse relationship between increase in quantum of investment into the short-term assets & profitability. A study into the firms of India explores that a delicate balance has to be ensured between investment into the short-term assets & profitability in order to achieve the overwhelming objective of shareholder's wealth maximisation, an attempt to envision the working capital management into the industrial sector.