Working Capital Management in select Automobile Companies in India

Working capital management directly affects profitability and is considered as one of the most important facets of financial decision-making. Infrastructural development of a nation comprises of urban development, rural development and industrial development, but the hidden requirement of infrastructure is the connectivity between various regions, which is fulfilled by the automobile industry. This paper has made an attempt to analyse the liquidity and solvency position of the select automobile companies in India. The period of the study for ten years i.e., from 2008-09 to 2017-18 has been adopted. It is concluded that the average current ratios of select automobile companies are not satisfactory because ratio of all select companies are below the standard norm. The average Quick ratio of select automobile companies had depicted good performance because Bajaj Auto Ltd., and Hero Motocorp Ltd., companies ratio was above the standard norm and remaining companies had reported poor performance due to below the standard norm. The average inventory turnover ratios were recorded less than the standard norms during the study period. It may be concluded that the efficiency of inventory management was not upto mark as it was not turned over in commensurate with the cost of goods sold.