www.ijcrt.

org © 2022 IJCRT | Volume 10, Issue 4 April 2022 | ISSN: 2320-2882

A STUDY ON WORKING CAPITAL

MANAGEMENT WITH REFERENCE TO
HEMALAYA PVT LTD AT TRICHY

ABINAYA.R

MBA(final year student)

Department of Business Administration

Dhanalakshmi Srinivasan College of Arts and Science for Women

(Autonomus) Perambalur

Ms.Binija CS

Assistant professor Department of Business Administration

Dhanalakshmi Srinivasan College of Arts and Science for Women

(Autonomous ), Perambalur

ABSTRACT
Decisions with reference to capital involve managing relationship between a firms short assets and liabilities
to make sure a firm is in a position to continue its operations ,and have sufficient money flows to satisfy each
maturing short debts and future operational expenses at lowest prices,increasing firms gain.The capitals
noticeably go along with the operative cycle.A poring over of the operative cycle reveals that funds endowed
within the operation area unit recycled back in to money. The shorter the amount of operative cycle the large
are going to be the turnover of the funds endowed in varied functions . The shorter amount of operative cycle
shows higher potency of a firm. The potency of assets management are often determined by the in operation

IJCRT2204382 International Journal of Creative Research Thoughts (IJCRT) www.ijcrt.org d361

www.ijcrt.org © 2022 IJCRT | Volume 10, Issue 4 April 2022 | ISSN: 2320-2882

cycle of the firm. This paper aims at analysis the potency of assets management through the connection
between in operation cycle amount and profitableness of Himalaya Ltd. To measure the capital management
potency. Operative cycle has been calculated and therefore the relationship is formed with margin quantitative
relation.

INTRODUCTION

Working capital (abbreviated WC) is a financial metric which represents operating liquidity available
to a business, organization, or other entity, including governmental entities. Along with fixed assets such as
plant and equipment, working capital is considered a part of operating capital. Gross working capital is equal
to current assets. Working capital is calculated as current assets minus current liabilities. If current assets are
less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit
and Negative Working capital.

A company can be endowed with assets and profitability but may fall short of liquidity if its assets
cannot be readily converted into cash. Positive working capital is required to ensure that a firm is able to
continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming
operational expenses. The management of working capital involves managing inventories, accounts
receivable and payable, and cash.

1.4 RESEARCH METHODOLOGY

Research is a process in which the researches wish to find out the end result for a given problem and thus the
solution helps in future of actions. The research has been defined as “A careful in investigation or enquiry
especially through search for new facts in branch of knowledge”.

REVIEW OF LITERATURE
Verma (2015) – study examined the working capital management in Tata iron and steel company ltd,
Indian iron and steel company and steel authority of India ltd. during the period of 1978-1979 to 1985-1986
there are using various financial and statistical techniques finally concluded the three firm use of bank
borrowings to finance the working capital requirement.
Vijaykumar and A. Venkatachalam (2016) – the study focuses Tamilnadu Sugar Corporation for
the period of 1985-86 to 1993-94. That indicate the corporation has maintain moderate level of working
capital.in that long term funds has been used for meeting short term liability and excess liability. This period
of study to as affected the profitability.

IJCRT2204382 International Journal of Creative Research Thoughts (IJCRT) www.ijcrt.org d362

www.ijcrt.org © 2022 IJCRT | Volume 10, Issue 4 April 2022 | ISSN: 2320-2882

Kazmi Azar and mohd. amirkhan(2016)-the study define working capital analysis some used
various tools like cash, management of account receivables and management of inventory. The study only for
short term period there may comparison based on the international financial sector.so the study get some
importance of working capital enjoy full of profit in competitive industry.
Bansal (2017)-researcher study the working capital management in Himachal Pradesh agro industries
for the period of 1985-86 to 1994-95 with the help of various financial tools that are define working capital,
cash inventory, receivable and production capacity have not been managed properly by the company under
study.
Raheman Abdul and Mohamed nasr (2018)-in that study he observed that working capital
management and its effect on liquidity as well as profitability of firm. He selected 94 Pakistani firm on Karachi
stock exchange for 6 years period i.e. 1999-2004.he used various tool and techniques of persons correlation
and regression analysis. Finally find the negative and positive relationship in working capital management in
a firm
Paul (2018) – this is comprehensive study of working capital management in motor industries
company limited. During the period of 2001 to 2005 for 5year data collected. To analysis purpose uses various
kinds of ratio analysis. Finally shows that working capital of company under study has not been managed
efficiently and effectively.

TABLES AND CHARTS

Table : 1 CURRENT RATIO

YEARS CURRENT RATIO

2015-2016 1.61:1

2016-2017 2.19:1

2017-2018 1.77:1

2018-2019 1.96:1

2019-2020 2.14:1

IJCRT2204382 International Journal of Creative Research Thoughts (IJCRT) www.ijcrt.org d363

www.ijcrt.org © 2022 IJCRT | Volume 10, Issue 4 April 2022 | ISSN: 2320-2882

INTERPRETATION:
It is generally believed that 2:1 ratio shows a comfortable working capital position. The tendon
committee appointed by RBI had wide recommended a current ratio of 2:1. Company has maintained this
ration and increased it year by year. A current ratio is 1.61 in the current year. But in the other year the ratio
is nearer to 1:2 so we can say that the company having comfortable working capital position. CHART: 1

CURRENT RATIO

2.50

2.00

1.50

Series1
1.00

0.50

0.00
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

TABLE: 2 ACID-TEST RATIO

YEARS ACID-TEST RATIO

1.08:1
2015-2016

2.19:1
2016-2017

1.38:1
2017-2018

1.15:1
2018-2019

2.58:1
2019-2020

IJCRT2204382 International Journal of Creative Research Thoughts (IJCRT) www.ijcrt.org d364

www.ijcrt.org © 2022 IJCRT | Volume 10, Issue 4 April 2022 | ISSN: 2320-2882

INTERPRETATION:
Acid-test ratio is near to one in current year that is 1.08 as compare to 1.38 in the previous year.Over
all the acid-test ratio of last five year is very satisfactory so we can conclude that the absolute liquidity of the
Himalaya Pvt Ltd is in favor.
CHART:3

2.5

Series1
1.5
Series2
1

0.5

0
1 2 3 4 5 6 7 8 9 10

TABLE: 3

DEBTORS TURNOVER RATIO

YEARS DEBTORS TURNOVER RATIO

31.21:1

2015-2016
22.60:1

2016-2017
29.92:1

2017-2018
19.50:1

2018-2019
16.82:1

2019-2020

IJCRT2204382 International Journal of Creative Research Thoughts (IJCRT) www.ijcrt.org d365

www.ijcrt.org © 2022 IJCRT | Volume 10, Issue 4 April 2022 | ISSN: 2320-2882

INTERPRETATION
We know that the higher Debtor’s turnover ratio is not good for the firm. In the year 2013-14 it is31.21:1 but
in the previous year it was 22.60:1. So some improvement is needed.

CHART:3

DEBTORS TURNOVER RATIO

35

30

25

20
Series1

15 Series2

10

0
1 2 3 4 5 6 7 8 9 10

TABLE NO :4 CREDITORS TURNOVER RATIO

YEARS CREDITOR’S TURNOVER RATIO

3.33:1

2015-2016
4.62:1

2016-2017
5.47:1

2017-2018
5.49:1

2018-2019
3.96:1

2019-2020

IJCRT2204382 International Journal of Creative Research Thoughts (IJCRT) www.ijcrt.org d366

www.ijcrt.org © 2022 IJCRT | Volume 10, Issue 4 April 2022 | ISSN: 2320-2882

INTERPRETATION:

Higher Ratio of creditor turnover forces the company to check that payment is made with incredit
period properly or not. The creditors’ turnover ratio is 3.33 in 2013-14 as compare to 201415 the ratio is 4.62
which is higher than the other years.
CHART:4

CREDITORS TURNOVER RATIO

Chart Title
6
5

3Series1
Series2
2

0
1 2 3 4 5 6 7 8 9 10

IJCRT2204382 International Journal of Creative Research Thoughts (IJCRT) www.ijcrt.org d367

www.ijcrt.org © 2022 IJCRT | Volume 10, Issue 4 April 2022 | ISSN: 2320-2882

TABLE: 5

INVENTORY TURNOVER RATIO

YEARS INVENTORY TURNOVER RATIO

7.51 times

2015-2016
7.17 times

2016-2017
9.20 times

2017-2018
8 times

2018-2019
8.91 times

2019-2020

INTERPRETATION:
Higher the ratio more profitability the business would be. The ratio is joining the ability of
management with which it can move the stock. Inventory turnover ratio is highest in the year 201516 is 9.20
as compare to the other year but in current year it is 7.51 which is little lower than previous year but it is
obvious that in heavy industries like Himalaya Pvt Ltd have lower ration as compare to FMCG.
CHART: 5
INVENTORY TURNOVER RATIO

10
9
8
7
6
Series1
5
4 Series2

3
2
1
0
1 2 3 4 5 6 7 8 9 10

IJCRT2204382 International Journal of Creative Research Thoughts (IJCRT) www.ijcrt.org d368

 www.ijcrt.org © 2022 IJCRT | Volume 10, Issue 4 April 2022 | ISSN: 2320-2882

FINDINGS Findings of working capital management of Himalaya Pvt Ltd

• The Company having comfortable working capital position.
• The absolute liquidity of the Himalaya Pvt Ltd is in favor.
• The collection policy of the company is very good.
• The creditor’s turnover ratio is 3.33 in 2015-16 as compare to 2016-17 the ratio is 4.62 which is higher than
the other years.
• Inventory turnover ratio is highest in the year 2016-17 is 9.20 as compare to the other year but in current year
it is 7.51 which is little bit lower than previous year but it is obvious that in heavy industries like Himalaya
India Ltd have lower ratio as compared to others.
• The working capital ratio is 7.60 in 2015-16 and 5.57 in 2016-17 but the best favorable ratio is in 2018-19
which is 10 times. So, it indicates better working capital condition of the company.

CONCLUSION
In the present study I have analyzed the working capital management of Himalaya Pvt Ltd.
The study involves practical and conceptual over view of decisions concerning current assets like cash and
bank balance ,inventories( like raw materials ,w-i-p, finished goods ),sundry debtors, loans and advances,
other current assets and current liabilities like sundry creditors, securities and other deposits, other current
liabilities and provisions of Himalaya Pvt Ltd. Was with the objective of maximizing the overall net profit of
the bank. And complete synchronization and coordination among the working capital components which shall
contribute to optimum level of operations. Mismanagement of each or any of these components shall be
detrimental to the objectives of efficient operation, profitability and maximization of overall value of the
company. The working capital limits would be considered only after the project nearing completion and after
ensuring control over the inventory. The inventory is a great concern for Himalaya Pvt Ltd and it needs proper
procurement and management.

IJCRT2204382 International Journal of Creative Research Thoughts (IJCRT) www.ijcrt.org d369

www.ijcrt.org © 2022 IJCRT | Volume 10, Issue 4 April 2022 | ISSN: 2320-2882

BIBLIOGRAPY

Amarjit, Gill., Nahum, Biger., and Neil, Mathur. (2010). "The Relationship Between Working Capital
Management And Profitability: Evidence From The United States", Business andEconomics Journal, Volume
2010, BEJ-10.

Berryman, J. 2002. “Small Business Failure and Bankruptcy: A survey of the Literature”, European Small
Business Journal, 1(4), pp47-59

Christopher, S. B., Kamalavalli, A. L (2009). Sensitivity of profitability to working capital management in

Indian corporate hospitals.Eletronic copy avaible at
HTTP://ssrn.com/abstract=1331500.

Deloof, D. 2003. “Does Working Capital Management affect Profitability of Belgian Firms”? Journal of
Business Finance and Accounting, Vol 30 No 3 & 4 pp. 573 – 587

Dong H. P. (2010), “The Relationship between Working Capital Management and Profitability”. International
Research Journal of Finance and Economic.Issue-49.

IJCRT2204382 International Journal of Creative Research Thoughts (IJCRT) www.ijcrt.org d370