Impact of Working Capital Management Practices of Automobile Firms on their Profitability: An Example of Mahindra & Mahindra Ltd.

Working capital indicates the money required for daily operations of a business. A corporate pays a lot of importance on planning its long term capital needs. The sources and their cost are identified and then an optimum capital structure is designed. Not only long term funds and their cost affect the profitability of a firm but even working capital has an impact on profitability because effective working capital management is about striking a tradeoff between profitability and liquidity. With this background this paper attempts to study the impact of working capital management at Mahindra and Mahindra ltd, which is a capital intensive firm with significant investments in working capital i.e. inventory, receivables and cash.