Working Capital Position in Leading Indian Companies:A Comparison Vis-A-Vis Profitability

It is widely recognized that working capital constitutes an important aspect of corporate financial management with considerable bearing on shareholder value creation. However, the practices of leading companies do not always suggest that they concentrate on optimizing the key parameters of working capital as against looking at growth parameters. On the contrary, strategically, a number of companies have allowed their working capital positions to suffer in compensation for growth. The study looks at the broad general parameters of Indian companies as regards their working capital and seeks to establish relationship, if any, with these companies' profitability. Predictably, such an overall relationship does not seem to exist.