Benchmarking: Working Capital Efficiency

Presented By-

Kritika
Sharma (120020)

Mansi
(120023)

Shilpa
Kumari (120045)
 1. Introduction
2. Industry Overview
3. Objective and Contribution of
OUTLINE the study
4. Methodology
5. Data Analysis
6. Discussion and Conclusions
 • Wor k in g C a p it a l
Introduction • Wor k in g c ap i t a l e f f i ci e nc y
 Working Capital
 Working capital which is also known as net working capital is the difference between a
company’s current assets (such as cash, accounts receivable, inventory) and current liabilities
(such as accounts payable and accrued expenses).
 It is a measure of a company’s liquidity, operational efficiency and its short-term financial
health.
 A positive NWC indicates a company’s ability to meet its short-term financial obligations,
while at the same time very high level of working capital means a company is holding too much
of inventory or not investing its excess cash.
 A negative working capital signifies financial distress derived due to the occurrence of
unforeseen operating expenses.
 Working Capital Efficiency
 Efficient management of working capital means maintaining optimum level of working capital to
balance liquidity and solvency in a firm to ensure maximum profit of the organization.

 This balance is created by managing different components of working capital. All industries are not
sensitive to same set of working capital components and to same extent. Thus efficiency of working
capital is defined differently in different industries.
 LITERATURE REVIEW
We have gone through 25 research papers to get holistic idea about working capital efficiency
and the relationship between the working capital efficiency and firm Performance.

SIP 4th Report.xlsx

 CONTD…
 There studied 25 journals which tried to are negatively correlated. examine relation between
Working Capital Management and Profitability of the firms.
 Rimsha Khalid, Tehreen Saif, Abdul Rehman Gondal, Hamza Sarfaraz in a journal in MJBAS
(2018) established the WCM and profitability relation in Electrical Equipment listed in Karachi
Stock Exchange (Rimsha Khalid1, 2018). This study fills the gap of existing literature. The
study finds a statistically significant positive relation among WC (ITR, CR, D/E ratio,
OCF/Debt ratio) and ROA.
 A similar journal by Asif Iqbal (KEMCS, 2018) studying WCM and profitability relation in
Manufacturing Firms Listed in Karachi Stock Exchange. Through Correlation Analysis; it was
found that CR, QR and NOP are positively correlated while CCC and NOP .
CONTD…

Majority of the studies have provided evidence of positive relationship between working capital
efficiency and firm performance.
However, within the limited review we do not find studies attempting to benchmark working
capital efficiency.
Thus, the study majorly focuses on benchmarking working capital efficiency and also tries to
measure the relationship between working capital efficiency and firm performance in the Indian
context with latest data considering three different industries.
  To benchmark Working
Capital Structure of selected
companies from selected
Industries of India.
Objective of the
Study  To establish relationship
between Working capital
efficiency and
profitability.
  Agriculture and Food Industry of
India
 Pharmaceutical Industry of India
INDUSTRY  Wholesale and Retail Industry of
India
  Agriculture is the primary source
of livelihood for about 58 percent
Agriculture And Food of India’s population (and 70% of
rural household).
Product Industry in  Gross Value Added by
agriculture, forestry and fishing is
India 16.50% in Indian economy in
2019-20. In 2014-15, it was
18.20%.
Global Standing
 India is the largest producer of spices, pulses, milk, tea, cashew and jute; and the
second largest producer of wheat, rice, fruits and vegetables, sugarcane, cotton and oil
seeds.
 India is currently the world’s fourth largest producer of agro-chemicals.
 India has the largest livestock population of around 512 million.
Favorable Conditions
 India has the 10th largest arable land resources in the world. With 20 agro-climatic
regions, all 15 major climates in the world exist in India. The country also possesses 46
of the 60 soil types in the world.
 Strategic geographic location and proximity to food importing nations favor India in
terms of exporting processed foods.
Dip in consumption expenditure
 Consumer spending expenditure decreased 2.6% in first quarter of 2020 than
fourth quarter of 2019.
Record Production of Food Grains
 Government of India is targeting food grain production of 293.3 million
tonnes, which 2% more from record output achieved in current year.
 Indian Pharmaceutical Industry
hold 85 percent market share in
Indian economy and 15 percent
globally.

Pharmaceutical
Industry of India  Indian pharmaceutical industry
has grown over the period.
Currently, the market size is
estimated to be 20.83 US$ Billion
whereas the exports is estimated
to be 19.14 US$ Billion.
 Indian pharmaceutical industry is the world’s third largest producer of drugs by volume

 The Pharmaceutical industry builds over USD$ 11 billion of trade surplus annually and also the pharma sector is

amongst the top five sectors contributing in the reduction of India’s trade deficit

 EY report suggests that the pharmaceutical industry provides employment to over 2.7 million people, in areas

such as R&D and manufacturing.

 Indian pharmaceutical industry is the supplier to the 50 per cent of the demand across the world for different

antibodies, 40 percent of nonexclusive interest in the US and 25 percent of all medication in Joined Realm.
 1. Wholesale and retail industry is an

WHOLESALE important pillar in Indian Economy and

account for about 10 percent of its GDP

AND RETAIL
and expected to grow 25% by 2025 and
estimated to be US$ 60 billion by 2020
with the top five in the world by
INDUSTRY IN economic value.

INDIA 2. It generate employment to about 3.3%

and can sale any types of goods include
repairing and resale.
 Indian retail one of the fastest growing market in the world due to economic growth.
 It projected to grow from an estimated US$672 billion in 2017 to US$1200 billion in 2021F.
 Total consumption expenditure is expected to reach nearly US$ 3600 billion by 2020 from
US$1824 billion in 2017.
 FMCG market expected to increase US$ 103.7 billion by 2020 from Rs3.4 Lakh crore in FY2018.
 Participation from foreign and private players to boost retail infrastructure.
 GST came as a single unified tax system foe the sector and about 51% FDI is allowed in multi-
branded retail.
 Indian retail would add more than 39 million square feet of space by 2022.
 Projected that by 2021, traditional hold 75%, organised retail will reach 18%, and E-commerce
retail share will reach 7% of total market share.
 Population Size: Indian companies from
the selected industries of India

Sample Size: Top 100 companies of the

selected Industry of India based on its net
sales

Sample Element: Annual data was

SAMPLE DESIGN collected from standalone balance sheet as
well as Income statement for the period of 5
years i.e. 2015 to 2019

Tools used for Data Collection:

Secondary data is collected from Annual
Financial Standalone of the pharmaceutical
companies available on CMIE’s database;
ProwessIQ
Variables Meaning

GWC Total current asset.

NWC Total current asset less total current liabilities.

NWC/GWC Ability of a firm to meet its day-to-day operational activities.

C&B Liquidity

DIO The average time (in days) a company holds its inventory before selling it.

DRO The average time (in days) a company takes to collect payment after a sale has been made.

DPO The average time (in days) a company takes to pay its bills and invoices to its trade creditors.

OC The length of time between the purchase of inventory and the cash collected from the sale of
the inventory
NOC The length of time between paying for inventory and the cash collected from the sale of the
inventory
Net Profit Ratio Profit After Tax divided by Net Sales.

ROA Measures the profitability of a business in relation to its total assets. It is calculated by dividing
Net income by Average Total Asset.

ROE Return on equity (ROE) is a measure of financial performance calculated by dividing net

income by shareholder’s equity.

DE Ratio The debt-to-equity (D/E) ratio is calculated by dividing a company’s total liabilities by its
shareholder equity. It reflects the ability of shareholder equity to cover all outstanding debts in the
event of a business downturn.

Sales Growth Ratio It is percentage change in net sales for the current year relative to net sales for preceding year.
Methodology
 Tools Used For Data Analysis

Descriptive Analysis Correlation Analysis Regression Analysis

•To summarize data and •To find degree and •To find relation between two
find patterns and deviation. direction of relation among variables.
all variables.
RESULTS AND DISCUSSIONS
DESCRIPTIVE ANALYSIS
 AGRICULTURE AND FOOD INDUSTRY

Variables Mean Std. Deviation Min. Max. Median

GWC 6881 17593 142 159207 2169
NWC 1512 9250 -8781 86006 206
C&B 1197 6061 3 51595 131
DIO 115 97 13 561 84
DRO 44 41 0 237 33
DPO 57 51 4 330 45
OC 149 114 16 694 146
NOC 102 96 -95 498 86
Agriculture and Food Industry
Agriculture and Food Industry

Representatives of
the Industry
S.No. Company Name S.No. Company Name
1 I T C Ltd. 14 Tata Consumer Products Ltd.
2 Nestle India Ltd. 15 Hatsun Agro Products Ltd.
3 United Spirits Ltd.
16 Godfrey Phillips India Ltd.
4 Bajaj Hindusthan Sugar Ltd.
17 Dhampur Sugar Mills Ltd.
5 Britannia Industries Ltd.
18 L T Foods Ltd.
6 Glaxosmithkline Consumer Healthcare Ltd.
19 E I D-Parry (India) Ltd.
7 United Breweries Ltd.
8 Marico Ltd. 20 Varun Beverages Ltd.

9 Godrej Agrovet Ltd. 21 Heritage Foods Ltd.

10 Triveni Engineering & Inds. Ltd. 22 Jubilant Foodworks Ltd.
11 Gujarat Ambuja Exports Ltd. 23 Mcleod Russel India Ltd.
12 K R B L Ltd. 24 Radico Khaitan Ltd.
13 Balrampur Chini Mills Ltd. 25 D C M Shriram Inds. Ltd.

In case of Agriculture Industry, more than 80% of the total sales in 2014, was made by only top
25 companies of the Industry.
 PHARMACEUTICAL INDUSTRY

Variables Mean Std. Deviation Min. Max. Median

GWC 7996.56 15340.18 67.32 76067.62 1213.16
NWC 2613.61 8084.15 -28212.28 44136.08 183.19
C&B 1091.76 2534.85 0.98 13686.42 131.90
DIO 95.92 45.80 6.91 231.98 92.05
DRO 112.14 64.25 19.72 400.50 103.65
DPO 92.98 42.67 14.41 275.05 82.43
OC 208.06 76.13 97.77 439.39 201.06
NOC 115.08 70.25 -25.95 369.61 110.32
Pharmaceutical Industry
 Working Capital Financing Policy –
Pharmaceutical Industry
Short term
Year Long term sources
sources
2015 31% 69%
2016 34% 66%
Representatives of
the Industry
2017 31% 69%
2018 31% 69%
2019 36% 64%
5 year
33% 67%
average
S.No. Company Name S.No. Company Name
1 Abbott India Ltd. 14 Ipca Laboratories Ltd.
2 Ajanta Pharma Ltd. 15 Laurus Labs Ltd.
3 Alembic Pharmaceuticals Ltd. 16 Lupin Ltd.
4 Alkem Laboratories Ltd.
17 Natco Pharma Ltd.
5 Aurobindo Pharma Ltd.
18 Nectar Lifesciences Ltd.
6 Biocon Ltd.
19 Pfizer Ltd.
7 Cadila Healthcare Ltd.
8 20 Sanofi India Ltd.
Cipla Ltd.
9 21 Strides Pharma Science Ltd.
Divi'S Laboratories Ltd.
10 Dr. Reddy'S Laboratories Ltd. 22 Sun Pharmaceutical Inds. Ltd.
11 Glaxosmithkline Pharmaceuticals Ltd. 23 Syngene International Ltd.
12 Glenmark Pharmaceuticals Ltd. 24 Torrent Pharmaceuticals Ltd.
13 Granules India Ltd. 25 Wockhardt Ltd.
In case of Pharmaceutical Industry, more than 80% of the total sales in 2014, was
made by only top 25 companies of the Industry.
 WHOLESALE AND RETAIL INDUSTRY
Variables Mean Std. Deviation Min. Max.
GWC 9463.5 16340.0 22.2 108811.4

NWC 1032.0 6037.3 -39491.3 23852.2

C&B 1308.4 2772.5 0.2 15866.9

DIO 57.5 49.8 0.0 182.5

DRO 88.2 100.6 0.2 656.4

DPO 71.1 63.9 0.0 388.0

OC 145.7 103.3 15.7 678.3

NOC 74.6 72.8 -79.6 302.2

 Working Capital Financing Policy – Wholesale and Retail Industry of India

Year Long term sources Short term sources

2015 7% 93%

2016 5% 95%

2017 9% 91%

2018 11% 89%

2019 -18% 118%

5 year average 3% 97%

Wholesale and Retail Industry
In case of Wholesale and Retail Industry, more than 80% of the total sales in 2014, was made
by only top 25 companies of the Industry.
 Definition by Prof. Mark Haskin (2008)

 Profit Leaders: The companies

PROFIT LEADER, whose five-year Net Profit Ratio is
greater than industry’s average.
SALES LEADER,  Sales Leaders: The companies
whose five-year Sales Growth Rate
GROWTH LEADER is greater than the industry’s average.
 Growth Leaders: The companies
who fall in both categories i.e.
companies who are both Profit as
well as Growth leaders.
 Profit Leaders
Company Name GWC NWC
Agriculture and Food Industry
I T C Ltd. 174951 119193
Nestle India Ltd. 14080 2656 Sales Leaders
Britannia Industries Ltd. 6440 -1476 Company Name GWC NWC Growth Leaders
Britannia Industries Ltd. 6440 -1476 Company Name GWC NWC
Glaxosmithkline Consumer
32258 19348 United Breweries Ltd. 15525 2246 Britannia Industries Ltd. 6440 -1476
Healthcare Ltd. Marico Ltd. 10563 4677 United Breweries Ltd. 15525 2246
United Breweries Ltd. 15525 2246 K R B L Ltd. 22089 7659 Marico Ltd. 10563 4677
K R B L Ltd. 22089 7659
Marico Ltd. 10563 4677 Balrampur Chini Mills Ltd. 23655 2636
Hatsun Agro Products Ltd. 2954 -2090 Balrampur Chini Mills Ltd. 23655 2636
K R B L Ltd. 22089 7659 Dhampur Sugar Mills Ltd. 16538 -3436 Jubilant Foodworks Ltd. 906 -2330
Balrampur Chini Mills Ltd. 23655 2636 Varun Beverages Ltd. 3376 -4582 Radico Khaitan Ltd. 8944 834
Tata Consumer Products Ltd. 10176 5677 Heritage Foods Ltd. 2057 -263 Average 12589 2035
Jubilant Foodworks Ltd. 906 -2330
Godfrey Phillips India Ltd. 9213 3130
Radico Khaitan Ltd. 8944 834
Jubilant Foodworks Ltd. 906 -2330 Average 10277 352
Radico Khaitan Ltd. 8944 834
Average 27400 13688
 Profit Leaders
Company Name GWC NWC PHARMACEUTICAL INDUSTRY
Ajanta Pharma Ltd. 6780 4420
Alembic Pharmaceuticals Sales Leaders
Ltd. 11784 4479 Company Name GWC NWC Growth Leaders
Alkem Laboratories Ltd. 21872 7606 Alembic Pharmaceuticals Company Name GWC NWC
Aurobindo Pharma Ltd. 76068 24368 Ltd. 11784 4479 Alembic Pharmaceuticals
Alkem Laboratories Ltd. 21872 7606 Ltd. 11784 4479
Biocon Ltd. 19787 13090 Cadila Healthcare Ltd. 27939 4498 Alkem Laboratories Ltd. 21872 7606
Cadila Healthcare Ltd. 27939 4498 Divi'S Laboratories Ltd. 24216 18037 Cadila Healthcare Ltd. 27939 4498
Divi'S Laboratories Ltd. 24216 18037 Glenmark Pharmaceuticals Divi'S Laboratories Ltd. 24216 18037
Glenmark Pharmaceuticals Ltd. 46382 24156 Glenmark Pharmaceuticals
Ltd. 46382 24156 Granules India Ltd. 8228 1275 Ltd. 46382 24156
Laurus Labs Ltd. 10730 -44 Natco Pharma Ltd. 11581 6153
Lupin Ltd. 62070 44136
Natco Pharma Ltd. 11581 6153 Pfizer Ltd. 19722 13529
Natco Pharma Ltd. 11581 6153 Pfizer Ltd. 19722 13529 Strides Pharma Science
Pfizer Ltd. 19722 13529 Strides Pharma Science Ltd. 10885 -174 Ltd. 10885 -174
Sun Pharmaceutical Inds. Syngene International Ltd. 11730 4933
Strides Pharma Science Ltd. 10885 -174
Ltd. 64066 -28212 Torrent Pharmaceuticals
Syngene International Ltd. 11730 4933 Syngene International Ltd. 11730 4933 Ltd. 26675 7574
Torrent Pharmaceuticals Ltd. 26675 7574 Torrent Pharmaceuticals Ltd. 26675 7574 Average 21278 9079
Average 22755 4908
Average 26964 12629
Wholesale and Retail industry – Profit and sales leader
 Operating Cycle – Agriculture Industry

(in days) Profit Leaders Sales Leaders Growth Leaders

DIO 134 117 131

DRO 39 40 51

DPO 63 54 58

OC 162 156 182

NOC 99 102 124

 Source Of Financing – Agriculture Industry

Profit Leaders Sales Leaders Growth Leaders

Long Term (NWC/GWC) 15% -27% -8%

Short Term 85% 127% 108%

 Current Assets Policy – Agriculture Industry

Profit Leaders Sales Leaders Growth Leaders

CA/NS 48% 35% 41%

Current Assets Policy Moderate Moderate Moderate

 Cash Policy – Agriculture Industry

Profit Leaders Sales Leaders Growth Leaders

Cash Policy 10% 2% 2%

 Operating Cycle - Pharmaceutical Industry

(in days) Profit Leaders Sales Leaders Growth Leaders

DIO 128 129 130

DRO 115 115 109

DPO 106 111 114

OC 242 243 239

NOC 136 132 125

 Source Of Financing – Pharmaceutical Industry

Profit Leaders Sales Leaders Growth Leaders

Long Term (NWC/GWC) 46% 29% 41%

Short Term 54% 71% 59%

 Current Assets Policy –Pharmaceutical Industry

Profit Leaders Sales Leaders Growth Leaders

CA/NS 66% 67% 67%

Current Assets Policy Moderate Moderate Moderate

 Cash Policy – Pharmaceutical Industry

Profit Leaders Sales Leaders Growth Leaders

Cash Policy 7.5% 7% 8%

 Operating Cycle – Wholesale and Retail Industry

(in days) Profit Leaders Sales Leaders Growth Leaders

DIO 49 59 66

DRO 53 41 43

DPO 59 68 77

OC 101 100 109

NOC 42 31 32
 Source Of Financing – Wholesale and Retail Industry

Profit Leaders Sales Leaders Growth Leaders

Long Term (NWC/GWC) -50% -2% 8%

Short Term 150% 102% 92%

 Current Assets Policy – Wholesale and Retail Industry

Profit Leaders Sales Leaders Growth Leaders

CA/NS 37% 31% 39%

Current Assets Policy Moderate Aggressive Moderate

 Cash Policy – Wholesale and Retail Industry

Profit Leaders Sales Leaders Growth Leaders

Cash Policy 7% 5% 8%
Comparing Sample With Leaders
 Freshtrop Fruits Ltd. (Agriculture and Food Industry)
DIO 141
DRO 82
Operating Cycle DPO 114
OC 223
NOC 109
NWC/GWC 20%
Source of Financing
1-(NWC/GWC) 80%
CA/NS 53%
Current Asset Policy
Policy Moderate
Cash Policy CB/NS 3%
GWC 779
Working Capital
NWC 159
 Bharat Immunologicals & Biologicals Crop. Ltd. (Pharmaceutical Industry)
DIO 43
DRO 125
Operating Cycle DPO 69
OC 167
NOC 98
NWC/GWC 44%
Source of Financing
1-(NWC/GWC) 56%
CA/NS 54%
Current Asset Policy
Policy Moderate
Cash Policy CB/NS 26.8%
GWC 654
Working Capital
NWC 284
 T T K Healthcare Ltd.( wholesale and Retail Industry)
DIO 52
DRO 36
Operating Cycle DPO 72
OC 88
NOC 22
NWC/GWC 27%
Source of Financing
1-(NWC/GWC) 73%
CA/NS 20%
Current Asset Policy
Policy Aggressive
Cash Policy CB/NS 3%
GWC 450
Working Capital
NWC 582
 Agriculture and Food Industry
Correlations
  DIO DRO DPO OC NOC D/E Ratio ROA Size SG
DIO P. Corr. 1 .243* .480** .937** .854** 0.119 -0.128 -0.062 0.059
DRO P. Corr. .243* 1 .373** .567** .474** 0.013 -.353** -0.022 0.037
DPO P. Corr. .480** .373** 1 .542** 0.114 .511** -.265** -0.014 .535**
OC P. Corr. .937** .567** .542** 1 .896** 0.106 -.236* -0.060 0.064
NOC P. Corr. .854** .474** 0.114 .896** 1 -0.144 -0.139 -0.064 -.207*
D/E Ratio P. Corr. 0.119 0.013 .511** 0.106 -0.144 1 -.363** 0.023 .822**
ROA P. Corr. -0.128 -.353** -.265** -.236* -0.139 -.363** 1 -0.109 -0.168
Size P. Corr. -0.062 -0.022 -0.014 -0.060 -0.064 0.023 -0.109 1 0.087
SG P. Corr. 0.059 0.037 .535** 0.064 -.207* .822** -0.168 0.087 1
*. Correlation is significant at the 0.05 level (2-tailed).

**. Correlation is significant at the 0.01 level (2-tailed).

 PHARMACEUTICAL INDUSTRY
Correlations
  DIO DRO DPO OC NOC D/E Ratio ROA Size SG
DIO P. Corr. 1 -0.072 -0.007 .540** .590** -0.087 0.167 .453** .238*

DRO P. Corr. -0.072 1 .494** .800** .567** .456** -.323** 0.003 -0.181

DPO P. Corr. -0.007 .494** 1 .413** -0.160 0.110 -.218* 0.070 -0.034

OC P. Corr. .540** .800** .413** 1 .833** .325** -0.172 .274** -0.010

NOC P. Corr. .590** .567** -0.160 .833** 1 .283** -0.054 .255* 0.010

D/E Ratio P. Corr. -0.087 .456** 0.110 .325** .283** 1 -.286** 0.053 -.420**

ROA P. Corr. 0.167 -.323** -.218* -0.172 -0.054 -.286** 1 .203* .400**

Size P. Corr. .453** 0.003 0.070 .274** .255* 0.053 .203* 1 0.193

SG P. Corr. .238* -0.181 -0.034 -0.010 0.010 -.420** .400** 0.193 1

*. Correlation is significant at the 0.05 level (2-tailed).

**. Correlation is significant at the 0.01 level (2-tailed).

 WHOLESALE AND RETAIL
 
TREADE Correlations
DIO DRO DPO OC NOC ROA DE Ratio size SG ROE
DIO Pearson 1 -0.192 0.053 .295** .373** 0.122 -0.138 0.020 -0.030 -0.122
Correlation
DRO Pearson -0.192 1 .710** .881** .627** -.333** 0.123 0.028 -0.132 .231*
Correlation
DPO Pearson 0.053 .710** 1 .717** 0.139 -.214* 0.022 0.118 -0.098 0.077
Correlation
OC Pearson .295** .881** .717** 1 .790** -.265** 0.053 0.037 -0.143 0.166
Correlation
NOC Pearson .373** .627** 0.139 .790** 1 -0.189 0.056 -0.051 -0.118 0.169
Correlation
ROA Pearson 0.122 -.333** -.214* -.265** -0.189 1 -.203* 0.037 0.023 0.026
Correlation
DE Ratio Pearson -0.138 0.123 0.022 0.053 0.056 -.203* 1 0.114 -0.058 .838**
Correlation
size Pearson 0.020 0.028 0.118 0.037 -0.051 0.037 0.114 1 0.057 .206*
Correlation
SG Pearson -0.030 -0.132 -0.098 -0.143 -0.118 0.023 -0.058 0.057 1 0.003
Correlation
ROE Pearson -0.122 .231* 0.077 0.166 0.169 0.026 .838** .206* 0.003 1
Correlation
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).
 Regression Model
1. ROA = f (NOC, DE Ratio, Size, Sales Growth)

 ROA = β0 + β1 NOC + β2 D/E + β3 Size + β4 Sales Growth

H0: β1 = β2 = β3 = β4 = 0

2. ROA = f (DIO, DPO, DRO, DE Ratio, Size, Sales Growth)

 ROA = β0 + β1 DIO + β2 DPO + β3 DRO + β4 DE Ratio + β5 Size + β6 Sales Growth

H0: β1 = β2 = β3 = β4 = β5 = β6 = 0
 Agriculture and Food Industry

(2nd Model) ANOVAa

Model Sum of Squares df Mean Square F Sig.
Regression 1418.064 6 236.344 7.751 .000b
1 Residual 2835.771 93 30.492    
Total 4253.834 99      
a. Dependent Variable: ROA
b. Predictors: (Constant), Size, DPO, DRO, DIO, D/E Ratio, SG
Following is the regression model fit, that predicts ROA:

ROA = 12.485 + (0.001)DIO + (-0.058)DRO + (-0.002)DPO + (-0.02)D/E + (0.018)SG + (-1.590-5)Size

Coefficientsa

Unstandardized Coefficients Standardized

Model Coefficients t Sig.
B Std. Error Beta
(Constant) 12.485 1.098   11.374 .000
DIO .001 .007 .019 .187 .852
DRO -.058 .015 -.363 -3.875 .000
1 DPO -.002 .016 -.014 -.113 .910
D/E Ratio -.020 .004 -.735 -4.842 .000
SG .018 .006 .468 2.962 .004
Size -1.590E-5 .000 -.139 -1.626 .107
a. Dependent Variable: ROA
 PHARMACEUTICAL INDUSTRY
ANOVAa

Model Sum of Squares df Mean Square F Sig.

Regression
2013.768 4 503.442 5.483 .001b
1 Residual
8539.442 93 91.822    
Total
10553.210 97      
Regression
2379.636 6 396.606 4.416 .001c
2 Residual
8173.574 91 89.819    
Total
10553.210 97      
a. Dependent Variable: ROA
b. Predictors: (Constant), Sales growth, NOC, size, DE Ratio
c. Predictors: (Constant), Sales growth, NOC, Size, DE ratio, DPO, DIO
 Following is the regression model fit, that predicts ROA for the first model:

ROA = 0.679 + (-0.007)NOC + (-0.633)DE Ratio + (1.010)Size + (0.243)Sales growth

Coefficientsa
Standardized
Unstandardized Coefficients
Model Coefficients t Sig.
B Std. Error Beta
(Constant)
.679 4.493   .151 .880
NOC
-.007 .015 -.047 -.464 .644

1. DE Ratio
-.633 .403 -.171 -1.572 .119
Size
1.010 .545 .184 1.854 .067

Sales Growth
.243 .097 .267 2.507 .014
a. Dependent Variable: ROA
Following is the regression model fit, that predicts ROA for the second model:

ROA = 5.068 + (-0.023)NOC + (-0.385)DE Ratio + (0.942)Size + (0.255)Sales growth + (0.023)DIO +

(-0.49)DPO
Coefficientsa
Standardized
Unstandardized Coefficients
Model Coefficients t Sig.
B Std. Error Beta

(Constant) 5.068 4.949   1.024 .309

NOC -.023 .020 -.155 -1.181 .241

DE ratio -.385 .428 -.104 -.900 .371

2. Size .942 .585 .171 1.611 .111

Sales growth .255 .097 .280 2.641 .010

DIO .023 .031 .102 .754 .453

DPO -.049 .025 -.194 -1.981 .051

 REGRESSION ANALYSIS – WHOLESALE AND RETAIL
INDUSTRY

Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .380a 0.144 0.089 0.063665712372067

2 .275a 0.076 0.037 0.065470172697335

a. Predictors: (Constant), Sales growth, NOC, Size, DE ratio

b. Predictors: (Constant), Sales growth, NOC, Size, DE ratio, DPO, DIO

 Coefficientsa
Unstandardized Coefficients Standardized
Model Coefficients t Sig.
B Std. Error Beta
(Constant) 0.073 0.045   1.649 0.103
NOC 0.000 0.000 -0.243 -2.491 0.015
1. DE Ratio -0.004 0.001 -0.931 -4.754 0.000
Size 0.003 0.006 0.076 0.552 0.582
Sales Growth -0.003 0.003 -0.060 -0.790 0.432
-0.425 0.135   -3.143 0.002
(Constant)
-9.603E-07 0.000 0.000 -0.003 0.997
NOC
0.028 0.001 0.854 20.969 0.000
DE ratio
0.039 0.018 0.134 2.174 0.033
2. Size
0.011 0.011 0.035 0.989 0.326
Sales growth
0.000 0.000 -0.024 -0.577 0.566
DIO
0.000 0.000 0.036 0.942 0.349
DPO
a. Dependent Variable: ROA
 FINDINGS – Agriculture and Food Industry
 The study finds out 12 Profit leaders, 11 Sales leaders and 7 Growth leaders out of the sample.

The present study through the descriptive analysis showed very high standard deviation in variables of
working capital. It was found that efficiency of working capital management affects Benchmarking
measures.

 In Pearson correlation analysis, significant positive correlation of Return on Asset with NWC and C&B
and negative correlation with DRO, DPO, OC, NOC.

 In regression analysis, taking Return on Asset (ROA) as dependent variable, it was found that DRO and
Sales growth is closely related to dependent variable, contributing to high dependability.
 FINDINGS – Pharmaceutical Industry
 The study finds out 14 Profit leaders, 13 Sales leaders and 10 Growth leaders out of the sample.

The present study through the descriptive analysis showed very high standard deviation in variables of
working capital. It was found that efficiency of working capital management affects Benchmarking
measures.

 In Pearson correlation analysis, significant positive correlation of Return on Asset with Sales growth and
negative correlation with DRO and DE Ratio @1% significance and at @5% significance a positive strong
correlation with Size and a negative strong correlation with DPO.

In regression analysis, taking Return on Asset (ROA) as dependent variable, it was found that Sales growth
is closely related to dependent variable, contributing to high dependability.
 FINDINGS – Wholesale and Retail Industry
The study finds out 12 Profit leaders, 13 Sales leaders and 7 Growth leaders out of sample.
Pearson Correlation Analysis and P value in correlation shows the significance. At 1% significance
level Return on Asset has positive relation with NWC, NWC/GWC, NPM, Sales growth and
negative relation with DRO and OC. At 5% significance level it shows positive relationship with
DE ration and negative relation with DRO.
In descriptive analysis, with the wide variability in standard deviation value from 63 to 16340
shows it affects company Benchmark through working capital management.
In regression NOC and Size is closely related with ROA with the value 0.015 and 0.033 which
contributing high dependability.
In terms of Source of Finance, Profit Leader has comparatively better than the growth and sales leader.
Thank You!