IMPACT OF WORKING CAPITAL MANAGEMENT ON PROFITABILITY OF SELECTED AUTOMOBILE COMPANIES IN INDIA

Abstract

Working capital management plays an important role in maintaining liquidity and improving the profitability of business enterprises. Efficient management of current assets and current liabilities helps firms reduce unnecessary investment in working capital and improve the utilisation of available financial resources. The automobile industry requires substantial investment in inventories, production activities and supply-chain operations; therefore, working capital efficiency is particularly important for financial performance. The present study examines the relationship between working capital management and profitability using five years of financial data available in the uploaded dataset. The analysis uses the financial information of Mahindra & Mahindra Limited for the period from March 2022 to March 2026. The study evaluates liquidity, inventory management, receivables management and the cash conversion cycle in relation to profitability. Current Ratio, Quick Ratio, Inventory Turnover Ratio, Receivables Turnover Ratio and Cash Conversion Cycle are used as indicators of working capital management, while Net Profit Margin and Return on Assets are used as profitability indicators. Ratio analysis, trend analysis, descriptive statistics and correlation analysis are applied. The findings show a substantial improvement in profitability during the study period. Inventory turnover and receivables efficiency show fluctuations, while the company maintained a negative cash conversion cycle throughout the study period. The analysis suggests that working capital management remains an important element of profitability; however, the results should be interpreted cautiously because the uploaded dataset presently contains financial data for only one automobile company