An Impact Assessment of Working Capital Management on Profitability of Telecom Industry Firms in India
P. S. Ravindra*(Professor, Department of Management Studies, Vignan’s Institute of Engineering for Women, Visakhapatnam, A.P., India), M. Satyavathi(Assistant Professor, Department of Management Studies, Vignan’s Institute of Engineering for Women, Visakhapatnam, A.P., India) and L. Tejaswini (Assistant Professor, Department of Management Studies, Vignan’s Institute of Engineering for Women, Visakhapatnam, A.P., India) *Corresponding author's Email
Ravindra, P. S.; Satyavathi, M. and Tejaswini, L. (2020), “An Impact Assessment of Working Capital Management on Profitability of Telecom Industry Firms in India”, MERC Global’s International Journal of Management, Vol. 8, Issue 3, pp. 116-120.
Submitted: March 19, 2020, Revision received: April 30, 2020, Accepted: May 20, 2020
Working Capital Management (WCM) should be carried out as efficiently as possible to maximise value creation for the various stakeholders. The present paper examines the specific relationship between profitability and efficiency of working capital management in the worldwide the impact of Working Capital Management on the profitability of Bharti Airtel Limited. To analyse the study various ratios have been used. The study used the Current Ratio (CR), Quick Ratio (QR), Debtor Turnover Ratio (DTR) and Inventory Turnover Ratio (ITR) as an independent variable and Operating Profit Margin (OPM) as the dependent variable. This study is purely based on secondary data collected from annual reports and various websites for the period of 2014-15 to 2018-19. The research methodology used in this study was descriptive statistics and Pearson’s simple correlation analysis to know the impact of independent variables on the dependent variable. The result of correlation analysis shows that there is a negative relationship between CR and OPM, QR and OPM, ITR and OPM but positive relationship between the DTR and OPM. The current study states that DTR has a high influence on profitability.
Working capital management, Profitability, Current and quick ratio, Debtors and inventory turnover.
References / Bibliography
Ahmed, S. U. and Abdullah, M. (2017), “Impact of Working Capital Management on Profitability: A Study on Textile Companies of Bangladesh”, Journal of Business & Financial Affairs, Vol. 6, Issue: 4, pp. 1-7.
Barot, Haresh (2012), “Working Capital Management and Profitability: Evidence from India – An Empirical Study”, Ganpat University - Faculty of Management Studies, Journal of Management and Research, Vol. 5, Issue: 2, pp. 1-8.
Chakraborty, Nirmal (2014), “Working Capital Management and Its Impact On Profitability: A Case Study of Dr. Reddy’s Laboratories Limited”, International Journal of Research in Commerce, IT & Management, Vol. 4, Issue: 02, pp. 33-37.
Dulta, Joginder Singh (2001), “Working Capital Management of Horticulture Industry in HP. - A case study of HPMC”, Finance India, Vol. 15, Issue: 2, pp. 644-648.
Eljelly, A. (2004), “Liquidity and Profitability trade-off: An empirical investigation in an emerging market”, International Journal of Commerce and Management, Vol. 14, Issue: 2, pp. 48-61.
Iqbal, Asif and Zhuquan, Wang (2015), “Working Capital Management and Profitability Evidence from Firms Listed on Karachi Stock Exchange”, International Journal of Business and Management, Vol. 10, Issue: 2, pp. 231-235.
Kendril, Selcuk and Kaya, Aslihan (2016), “The Evaluation of Working Capital in Airline Companies which Proceed in BIST”, Journal Economic Development, Environment and People, Vol. 5, Issue: 1, pp. 39-51.
Khan, M. Y. and Jain, P. K. (2011), Financial Management - Text, Problems and Cases, Tata McGraw-Hill Education Private Limited, India.
Mandal, Niranjan and Goswami, Suvarun (2010), “Impact of Working Capital Management on Liquidity, Profitability and Non-Insurable Risk and Uncertainty Bearing: A Case Study of Oil and Natural Gas Commission (ONGC)”, Great Lakes Herald, Vol. 4, Issue: 2, pp. 21-41.
Pambayun, K.; Nastiti, Yekti and Supramono (2019), Working Capital Management and its influence on Profitability and Sustainable Growth, Business: Theory and Practice, VGTU Press, India.
Sharma, A. K. and Kumar, Satish (2011), “Effect of Working Capital Management on Firm Profitability: Empirical Evidence from India”, Global Business Review, Vol. 12, Issue: 01, pp. 159-173.
Sharma, Poonam Gautam and Kaur, Risham Preet (2013), “Working Capital Management and its Impact on Profitability: A Case Study of Bharti Airtel Telecom Company”, Imperial Journal of Interdisciplinary Research, Vol. 2, Issue:3, pp. 265-271.
Varun, Kesavan (2015), “A study on Working Capital Management of Aviation Industry with Specific Reference to Spicejet Airlines”, International Journal of Latest Technology in Engineering, Management & Applied Science, Vol. 4, Issue: 3, pp. 67-75.
Vijayakumaran, R. (2019), “Efficiency of Working Capital Management and Firm Value: Evidence from Chinese Listed Firms”, International Journal of Financial Research, Vol. 10, Issue: 6, pp. 133-144.