Impact of Working Capital Management on Firm Profitability: A Study of Select FMCG Companies in India

Abstract

   Working  Capital  Management  (WCM)  is  one  of  the  pre-conditions  for  the  financial  management  of  the companies.  It  aims  at  maintaining  an  adequate  amount  of  readily  available  cash  resources  in  the  business  for carrying out the daily operations of the company. Simultaneously, the managers also need to keep a watch on the profitability  position  of  the  company.  The  corporate  managers  try  to  maintain  an  efficient  working  capital management  by  maintaining  a  good  liquidity  position  in  the  business  without  jeopardizing  the  level  of  profit earned. It, therefore, becomes important for them to determine a trade-off between profitability and liquidity position of the companies for their smooth running and expansion. In this context, in the proposed paper, an attempt has been made to examine the working capital management of Fast Moving Consumer Goods (FMCG) companies in India and its impact on the profitability of these companies.