Manuscript Title:

AN EMPIRICAL ANALYSIS OF THE IMPACT OF WORKING CAPITAL MANAGEMENT ON THE FINANCIAL HEALTH OF THE AUTOMOBILE SECTOR IN INDIA

Author:

ARVIND KUMAR JAIN, Dr. SANJEEV KUMAR

DOI Number:

DOI:10.5281/zenodo.13284469

Published : 2024-08-10

About the author(s)

1. ARVIND KUMAR JAIN - PhD Scholar, Raffles University.
2. Dr. SANJEEV KUMAR - Dean, Alabbar School of Management, Raffles University.

Full Text : PDF

Abstract

This study examines the impact of working capital management on the financial health of selected automobile companies in India through a comprehensive analysis of inventory turnover, liquidity ratios, and profitability metrics from 2020 to 2024. Inventory turnover, a critical indicator of operational efficiency, varied significantly among companies, reflecting diverse strategies in inventory management. High-performing companies like Bajaj Auto and Hero MotoCorp demonstrated consistent and efficient inventory turnover, correlating with strong profitability and liquidity. In contrast, companies such as Bosch and Tata Motors showed lower and more volatile turnover ratios, indicating challenges in inventory management. Liquidity ratios highlighted varying degrees of financial stability in meeting short-term obligations. Companies with stronger liquidity positions, like Bosch and Eicher Motors, were better equipped to manage short-term financial commitments. Profitability analysis revealed that efficient working capital management positively influenced profitability, with high turnover ratios associated with improved returns on assets and equity. The study underscores the importance of optimizing working capital management strategies tailored to each company's operational dynamics. Recommendations include enhancing inventory control systems, improving supply chain efficiencies, and refining cash flow management practices. Companies with high leverage and low profitability, such as Tata Motors, should consider restructuring their capital to mitigate financial risks. By implementing these recommendations, automobile companies can enhance their financial health, operational efficiency, and overall competitiveness in the market.


Keywords

Working Capital Management, Inventory Turnover, Liquidity Ratios, Profitability, Automobile Sector.