Beyond the Balance Sheet: Dissecting the Impact of WCM on Profitability in India’s Business Arena

Abstract

This research delves into the intricate relationship between working capital management components and various profitability metrics within the Indian corporate sector. Drawing data from 600 companies, the study employs a multifaceted analytical approach, encompassing descriptive analysis, Pearson correlation and multiple regression analyses. Findings underscore the paramount significance of efficient working capital management practices. Particularly, components like days receivable and average inventory emerge as pivotal determinants of profitability metrics, such as return on equity and return on assets. Furthermore, the study identifies distinctive patterns unique to the Indian business landscape, emphasizing the need for bespoke financial strategies tailored to local market dynamics. The research not only augments the existing body of financial literature, but also offers actionable insights for practitioners aiming to optimize profitability through strategic liquidity management. As global business terrains continue to evolve, this study serves as a beacon, guiding fiscal strategies within emerging markets.

Keywords

• working capital management
• profitability metrics
• indian corporate sector
• liquidity management