Study the Relation between Working Capital System and Profitability in Auto Manufacturing Industry in India

Abstract

The new economic policy adopted in India in 1991 known as Liberalization, Privatization and Globalization (LPG model). This policy  has been designed to make the Indian economy progressively market oriented and integrate it with the emerging global economy structure. Therefore, in line with this policy it was very indispensable to analyze the working management and some financial ratios in some selected Auto manufacturing companies. The purpose of the study was to analyze the practice of working capital Management and Asset and liquidity ratios in six selected Indian auto manufacturing companies. For this aforementioned study, a time series data for the years 2003- 2012 has been employed and a secondary data from the annual reports of the six companies was solicited. Both qualitative and quantitative paradigms were employed so as to analyze the research. Regarding  the relation between working capital and turnover analysis,  index of  inventory turnover, debtors turnover ratio, total assets turnover ratio and  fixed assets turnover ratio were used. . The minimum inventory turnover ratio chain index among all selected companies  was founded  in Ashok Leyland in 2009-2010 that was 74.60 and  the maximum was  founded in Maruti Suzuki that was  214.76 in 2010-2011. TVS Motor was denoted by the minimum debtors turnover ratio chain index among all selected companies in 2009-2010 that was 55.68 and the maximum debtors turnover ratio chain index was in Maruti Suzuki that was 438.51 in 2010-2011. TVS Motor was denoted by the minimum total assets turnover ratio chain index among all selected companies in 2008-2009  that was 43.15 and the maximum was Ashok Leyland in 2006-2007 that was 176.92. . The minimum fixed assets turnover ratio chain index  among selected companies was  founded in Ashok Leyland in 2009-2010 that was 61.94. The maximum fixed assets turnover ratio chain index among, selected companies was  founded in  Hero MotoCorp in 2005 -2006 that was 174.41.

Keywords: Turnover, profitability, “Working capital Auto manufacturing companies”