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Paper Title: EFFICIENCY ANALYSIS OF WORKING CAPITAL MANAGEMENT (A study on Selected FMCG Companies in India)
Authors Name: E. Lokeswari
Unique Id: IJSDR1912005
Published In: Volume 4 Issue 12, December-2019
Abstract: 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.
Keywords: Net Working Capital position in FMCG, Efficiency of Working Capital Management, Cash Conversion Cycle (CCC), Current Ratio. Inventory turnover, Debtors turnover and Creditor turnover
Cite Article: "EFFICIENCY ANALYSIS OF WORKING CAPITAL MANAGEMENT (A study on Selected FMCG Companies in India)", International Journal of Science & Engineering Development Research (www.ijsdr.org), ISSN:2455-2631, Vol.4, Issue 12, page no.17 - 25, December-2019, Available :http://www.ijsdr.org/papers/IJSDR1912005.pdf
Downloads: 00060116
Publication Details: Published Paper ID: IJSDR1912005
Registration ID:191141
Published In: Volume 4 Issue 12, December-2019
DOI (Digital Object Identifier):
Page No: 17 - 25
Publisher: IJSDR | www.ijsdr.org
ISSN Number: 2455-2631

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