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The Study Of Working Capital Management As A Finacial Strategy For Hero Motocorp Limited

P. Megala Devi, S. Parimala, M. Muthupriya

Abstract


Working capital management as a financial strategy has its effects on liquidity as well as profitability of the firm. Hero Motocorp Limited was selected for a period of ten years from 2006-2015.The effect of different variables of working capital management including current ratio and gross profit movement co-efficient was used for analysis. The results showed that there is a negative correlation (-0.201) between current ratio and gross profit margin. This means that as current ratio reduces, gross profit of the company will increase. The firm should be aggressive in the management of its working capital to improve profitability. In order to run the company successfully, the fixed and the current assets play a commendable role.

Managing the working capital is mandatory because, it has a major significance on profitability and liquidity of the business concern. The various components for measuring the working capital management include the Receivable days, Inventory turnover days, Payable days, Cash conversion cycle, Current ratio and Quick ratio on the Net operating profitability of the Hero Motocorp Limited. The controlled variables like; Fixed assets on total assets, the Debt ratio and the size of the firm (measured in terms of natural logarithm of sales) have also been used for measuring of the working capital management.

Key words: Working capital, Financial strategy, Liquidity, Profitability.

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References


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DOI: https://doi.org/10.37628/ijpe.v2i1.137

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