Authors:-Pavithraa M
Abstract:-The Working capital management is an important aspect in the financial decisions of any firm, as it is an indicator for efficient management of current assets and liabilities .This paper is an empirical analysis about the relation between the components of the working capital and the profitability and liquidity positions of the textile companies in India. Five textile companies were chosen and analyzed for a period of 5 years from 2013 to 2017 with the secondary data from annual reports of the firms chosen. The tests employed were used to examine the trends in the variables considered through graphs .Correlation and regression was also employed to determine the strength of the relationship between the net working capital and its components with the profitability of the firms. As a result, the correlation between the net working capital and profitability was indirectly related to the correlation of net working capital and liquidity .Similarly regression was done using pooled OLS Regression method with the return on assets as the dependent variable with the cash conversion cycle and its components using 5 models. The profitability is not directly related with the working capital of the firms on the whole while the liquidity position was directly related. The trends in the working capital were also varying over the period of years with negative trend in two firms which is an indicator of poor management of current assets incurring losses if remains unchecked .
Keywords: - Working capital management, financial decisions, profitability and liquidity positions
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