Working Capital and its Relationship with Sales (A Case Study of Tamil Nadu Newsprint and Papers Limited)

Author: Sanjay Kumar Rastogi, G. K. Sharma

Abstract:
The purpose of this paper is to analyse the status of gross and net working capital and their association with sales of Tamil Nadu Newsprint and Papers Ltd., with reference to the Indian paper industry the period under study from 2006 to 2013. The research is mainly based on secondary financial data obtained from the Annual Reports of TNPL, BSE and NSE. It focused on the size, character, and annual growth rates of gross and net working capital of the company. In addition, it analysed the growth trends of gross and net working capital of the company in relation to sales. With the help of the Karl Pearson’s correlation model, the inter-relationship between sales and working capital has been identified. Then the strength and significance of such a relationship has been tested with the use of other statistical tools such as coefficient of determination and Student’s t-test. The major findings of the research showed that while there was an increase in sales positively, strongly, and significantly associated with an increase in gross working capital for both the company and the industry, its association with net working capital was negative, poorly related, weak, and insignificant for the company under study. There is a dearth of studies in the available literature that discusses the relationship existing between sales and working capital in India’s paper industry, in general and Tamil Nadu Newsprint and Papers Ltd. in particular, and therefore this research is expected to add significant value to exploring the said linkage.

Keywords:Working Capital, Gross Working Capital, Net Working Capital, Sales and Tamil Nadu Newsprint and Papers Ltd.

DOI:

International Journal of Trade & Commerce (Vol: 3 Issue:2)