• ISSN: 2010-023X (Print)
    • Abbreviated Title: Int. J. Trade, Economics and Financ.
    • Frequency: Bimonthly
    • DOI: 10.18178/IJTEF
    • Editor-in-Chief: Prof.Tung-Zong (Donald) Chang
    • Executive Editor: Ms. Cherry L. Chen
    • Abstracting/ Indexing:  ProQuest, Crossref, Electronic Journals Library , EBSCO, and Ulrich's Periodicals Directory
    • E-mail: ijtef@ejournal.net
IJTEF 2017 Vol.8(4): 210-216 ISSN: 2010-023X
DOI: 10.18178/ijtef.2017.8.4.566

Relationship between Working Capital Management and Profitability of Automobile Companies in India: A Paradigm Shift towards Economic Strengthening

Syed Noorul Shajar
Abstract—Widespread interest in the field of corporate finance, in particular working capital management has grown rapidly in recent years. It is an act of judiciously balancing the liquidity and profitability of finance available to the management, which insinuate its inevitability for the management as an inexorable component of every walks of economic life whether in a household or in a business concern, in the public discipline or in private, for the purpose of profit earning or social welfare. So a well designed and implemented working capital management is expected to contribute positively to the profitability and firm’s value. The efficient working capital management is very climacteric factor in maintaining survival, liquidity, solvency and profitability of any business organization. Moreover, an optimal working capital management positively contributes to the value of every concern. To overcome competition in a very complex and dynamic environment it is an arduous task for the companies to optimizing of their working capital as a real competitive advantage to leverage profit. To reach optimal working capital management, the manager should judiciously manage relationship between profitability and working capital components precisely. The prime objective of working capital management is to ensuring consistency in day to day operations of a concern vis-à-vis fulfilling short term financial obligations within the company. Which is only possible by deliberately managing inventories, receivables, payables and cash of the business concern. So this study is an attempt to measures the relationship as well as impact of working capital management on the profitability of 26 Automobile companies listed at Bombay Stock Exchange for the period 2007-2016.

Index Terms—Working capital management, Return on assets, Tobin’s-q, automobile, profitability.

S. N. Shajar is with the department of Commerce, Amu, Aligarh (e-mail: noorulshajar@gmail.com).


Cite: Syed Noorul Shajar, "Relationship between Working Capital Management and Profitability of Automobile Companies in India: A Paradigm Shift towards Economic Strengthening," International Journal of Trade, Economics and Finance vol.8, no.4, pp. 210-216, 2017.

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