An Empirical Analysis of Working Capital Management of Varun Motors in India

An Empirical Analysis of Working Capital Management of Varun Motors in India

Zaid Tareq Abdulhameed¹

¹ Research Scholar, Andhra University, Visakhapatnam, Andhra Pradesh, India.

Abstract

Optimal management of working capital is an important financial decision and contributes positively to the value creation of business. Every business needs investment to procure fixed assets, which remain in use for a longer period. Money invested in these assets is called ‘Long term Funds’ or ‘Fixed Capital’. Business also needs funds for short-term purposes to finance current operations. Investment in short term assets like cash, inventories, debtors etc. is called ‘Short-term Funds’ or ‘Working Capital’. The ‘Working Capital’ can be categorized, as funds needed for carrying out day-to-day operations of the business smoothly. The management of the working capital is equally important as the management of long-term financial investment. The role of finance manager, therefore, is a very vital and vested with responsibility of maintaining the business operations in an efficient and profitable manner. Mismatch, if any in effective management of current assets and current liabilities would not only result negative impact of profitability and firm’s growth but also financial distress and bankrupt of business entity. This study considering the significance of the above, shall make an attempt to investigate the efficiency of working capital management of Varun Motors and its relationship with profitability and net worth.

Keywords: Working Capital, financial investment, management, Varun Motors.