Effect of Working Capital on Profitability in Private Sugar Factories of Rayalaseema Region, Andhra Pradesh

International Journal of Economics and Management Studies

© 2016 by SSRG - IJEMS Journal

Volume 3 Issue 4

Year of Publication : 2016

Authors : G.L.Meena, Dr. I. Lokanandha Reddy

10.14445/23939125/IJEMS-V3I4P103

How to Cite?

G.L.Meena, Dr. I. Lokanandha Reddy, "Effect of Working Capital on Profitability in Private Sugar Factories of Rayalaseema Region, Andhra Pradesh," SSRG International Journal of Economics and Management Studies, vol. 3,  no. 4, pp. 1-16, 2016. Crossref, https://doi.org/10.14445/23939125/IJEMS-V3I4P103

Abstract:

Over the years there has been a big debate on the effect of working capital on the profitability. Few researchers argue that working capital is just an idle resource with a high cost and low benefit associated with it so, companies should follow zero working capital policy but such a policy is very risky because it reduces the liquidity and it might leads to a default. Other researchers support companies to have a working capital policy because they believe that proper management of components of working capital can balance cost and benefits of the company and it will reduce the risk of default by raising the level of liquidity. Companies can choose among three different types of working capital i.e. aggressive, conservative and moderate but their choice depends on their desire level of liquidity and risk. Researchers realize the importance of the topic and lot of research has been carried out all over the world especially in developing countries like Pakistan, India, and Taiwan etc. Hence the present study is to analyse how the working capital components will affect the profitability of private sugar factories of Rayala Seema Region, Andhra Pradesh.

Keywords:

working capital, profitability, Return on Total Assets, Cash Conversion Cycle.

References:

1. Paul Aondona Angahar, Agbo Alematu (2014), Impact Of Working Capital On The Profitability Of The Nigerian Cement Industry , European Journal of Accounting Auditing and Finance Research Vol.2,No.7, pp.17-30, 2014.
2. Snober Javid, Velontrasina Prudence Marie Zita(2014) Impact of Working Capital Policy on Firm’s Profitability: A Case of Pakistan Cement Industry , Research Journal of Finance and Accounting www.iiste.org ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online) Vol.5, No.5, 2014 pp:182 - 191.
3. Titto Varghese, Kamal Kishore Dhote(2014) Impact of Working Capital Management on Firm Profitability: A Case Study of HUL Ltd, IQGL, International Journal of Financial Management. Volume 4 Issue 4 October 2014pp-56-66.
4. Asif Iqbal & Wang Zhuquan Working Capital Management and Profitability Evidence from Firms Listed on Karachi Stock Exchange, International Journal of Business and Management; Vol. 10, No. 2; 2015.pp-231-235.
5. Gamlath G.M.R,Rathiranee Yogendrarajah(2014)Effects of Working Capital Management and Profitability: Evidence from Listed Commercial Banks in Sri Lanka, Journal of Business Studies, Faculty of management Studies & Commerce, University of Jaffna, Sri Lanka, Special Issue March, 2014.PP-26-36.
6. Shagufta Nasreen, Farida Khanam, Syed Shahzaib Pirzada(2014) Impact of Working Capital Management on Firm’S Profitability, Research Journal of Finance and Accounting, Vol.5, No.11, 2014 PP-210-222.
7. Natarajan Vallalnathan, Getachew Joriye(i2013),Impact of Working Capital Management on the Profitability of Cooperative Unions in East Showa, Ethiopia, Greener Journal of Business and Management Studies ISSN: 2276- 7827 Vol. 3 (6), pp. 251-269, August 2013.