Liquidity Management in Indian Electrical Equipment Companies (A Comparative Study of Companies Listed in Nifty 50)

Author:Dharmendra Kumara & Charu Agarwalb*

Abstract:
Liquidity is perceived as the debt paying ability of a going concern. Liquidity refers to how quickly and cheaply an asset can be converted into cash. Liquidity is the ability of a company to meet the short term obligations. To keep a constant eye on liquidity position of a company, it is of utmost importance as without it a company cannot survive. In this paper a comparative study on the liquidity position of capital goods industry i.e., Indian Electrical Equipment Industry has been done to know the liquidity position of the companies listed in Nifty 50 under this segment. The techniques of mean, standard deviation, coefficient of variation, ratio analysis, and Motaal’s ultimate rank test has been applied to conclude. The major findings of the paper are the current assets, liquid assets, current liabilities, net working capital and quick net working capital of BHEL and Suzlon Energy Ltd. shows a positive growth rate which indicates that the liquidity position of the company was safe during the period of study except ABB Ltd. and Siemens Ltd whose quick net working capital growth rate is negative which indicates towards unsound liquidity position. The major components of current assets of all the companies are Inventories and Sundry debtors except Suzlon Energy Ltd. whose major component is loans and advances. According to Motaal’s Ultimate Rank Test the liquidity position of Siemens Ltd. seems to be sound among the selected companies.

Keywords:Keywords: Liquidity Management, Components of Working Capital, Ratio Analysis, Motaal’s Ultimate Rank Test.

DOI:

International Journal of Trade & Commerce (Vol: 1 Issue:2)