EFFICIENCY ANALYSIS OF WORKING CAPITAL MANAGEMENT (A study on Selected FMCG Companies in India)
Net Working Capital position in FMCG, Efficiency of Working Capital Management, Cash Conversion Cycle (CCC), Current Ratio. Inventory turnover, Debtors turnover and Creditor turnover
The most significant function for any company whether small or big firm are needs efficient Working Capital Management (WCM). A delicate balancing of net working capital is the requirement of WCM along with the maintenance of appropriate levels of profitability and liquidity. Correspondingly, the paper examines the WCM of well-known firms in FMCG industry of India. The study undertakes the comparative analysis and evaluation of working capital management through the employment of numerous parameters of Current Ratio, Payable Turnover, Receivable Turnover, Inventory Turnover, Cash Conversion Cycle, and Return on capital. The paper also investigates the impact of negative working capital on the relevant firm's profitability. The analysis was done on the data sourced from the annual reports and accompanying schedules of the company from FY 2010-2014. The companies examined were Nestlé India, Godrej Consumer Products Limited (GCPL), Dabur India, Hindustan Unilever Limited (HUL), and ITC Limited. The analysis found consistent performance of Nestle and HUL even with negative cash conversion cycle (CCC) and negative working capital. Interestingly, better returns on capital employed were found to be generated by companies with negative net working capital, maximizing their shareholder value that translated into higher EPS and market capitalization for them. Similarly, the profitability was also found to be better for companies which had negative CCC relative to those supporting positive CCC. Current ratio for all the companies emerged to be consistently lower than the standard norms. However, the study discourages the lower level of liquidity as maintained by the companies. Instead, in the long-run an appropriate balance between working capital needs and liquidity was suggested by the study.
"EFFICIENCY ANALYSIS OF WORKING CAPITAL MANAGEMENT (A study on Selected FMCG Companies in India)", IJSDR - International Journal of Scientific Development and Research (www.IJSDR.org), ISSN:2455-2631, Vol.4, Issue 12, page no.17 - 25, December-2019, Available :https://ijsdr.org/papers/IJSDR1912005.pdf
Volume 4
Issue 12,
December-2019
Pages : 17 - 25
Paper Reg. ID: IJSDR_191141
Published Paper Id: IJSDR1912005
Downloads: 000347965
Research Area: Management
Country: CHITTOR, ANDRAPRADESH, India
ISSN: 2455-2631 | IMPACT FACTOR: 9.15 Calculated By Google Scholar | ESTD YEAR: 2016
An International Scholarly Open Access Journal, Peer-Reviewed, Refereed Journal Impact Factor 9.15 Calculate by Google Scholar and Semantic Scholar | AI-Powered Research Tool, Multidisciplinary, Monthly, Multilanguage Journal Indexing in All Major Database & Metadata, Citation Generator
Publisher: IJSDR(IJ Publication) Janvi Wave
