Role of Working Capital Management in Liquidity of the Nifty 50 Pharmaceuticals Companies: A Comparative Study

Author:S.K. Rastogia*, Durgesh Kumarb

Abstract:
Purpose: The object of this paper is to examine the role of Working Capital on Liquidity as it plays a key role in the successful working of an organisation and decisive objective of any firm in order to maximize the profit. Increasing profits at the cost of liquidity can bring serious problems to the firms. Liquidity and profitability of a firm are both affected by inappropriate working capital. So, Working capital management should be given proper consideration and one should try neither to maximize nor minimize the liquidity ratios; one should always try to optimize the liquidity of an organisation. Design/methodology/approach: This study is based on secondary data. It is based on published annual reports of the four Nifty 50 Pharmaceutical Companies. We have used both Financial and Statistical formulas to get the result. Findings: The study finds that Sun Pharmaceutical Limited is the top ranked Company on the basis of Motaals Comprehensive Test. Moreover, there is no significant difference in the working capital management front among the four Nifty 50 Pharmaceutical Companies on the basis of ANOVA test. Limitation: The major and important limitation is time as the study covers a period of 5 years starting from 2013-14 to 2017-18.

Keywords:Keywords: Liquidity, Motaals Comprehensive Test, Working Capital Management, and NIFTY 50 Pharmaceutical Companies.

DOI:

International Journal of Trade & Commerce (Vol: 7 Issue:2)