The fixed and the current assets play a vital role in the success of any company. Managing the working capital is mandatory because, it has a huge significance on profitability and liquidity of the business concern. The increase in working capital helps in improving its liquidity. Thus, a company needs to have a correct balance between the liquidity position and the profits of the company. The various components for measuring the working capital management include the receivable days, Inventory turnover ratio, Payable days, Cash conversion cycle, Current ratio and Quick ratio on the Net operating profitability position of the Indian companies. The various factors like fixed assets on total assets, the Debt ratio and the size of the firm have also been used for measuring of the working capital management. Tata Steel has been managing the various aspect of working capital through continuous efforts over a long period of time. The present study is trying to investigate the different aspects of working capital management at Tata Steel. Working capital is generally the net difference between the total assets and the liabilities of the company. So an attempt to understand as to how the company manages the working capital has been done. In this project work we are trying to identify the various systematic processes in managing the working capital. The study is trying to identify the various liquidity, profitability, solvency and the turnover positions of the company as a tool of performance which will lead us to identify the financial soundness of the company. Hence the goal of working capital management is not just concerned with the management of current assets & current liabilities but also in maintaining a satisfactory level of working capital. Holding of current assets in substantial amount strengthens the liquidity position & reduces the riskiness but only at the expense of profitability. Therefore achieving risk-return tradeoff is significant in holding of current assets. While cash outflows are predictable it runs contrary in case of cash inflows. Sales program of any business concern does not bring back cash immediately. There is a time lag that exists between sale of goods & sales realization. The capital requirement during this time lag is maintained by working capital in the form of current assets. The whole process of this conversion is explained by the operating cycle concept. Working capital managementinvolves the relationship between a firm's short-term assets and its short-term liabilities. The goal of working capital management is to ensure that a firm is able to continue its operations and that it has sufficient ability 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. There are many ratios that can be calculated from the financial statements pertaining to a company's performance, activity, financing and liquidity. Some common ratios include the priceearnings ratio, debt-equity ratio, earnings per share, asset turnover and working capital.
Volume 12 | 02-Special Issue