Working capital management: An empirical study

When we try to understand the financial position of a firm, we seek to know its profitability over the years, its share price in the market and/or its credibility to pay off its long-term debts. The bigger picture might provide a good view but it may or may not present a fully accurate status of the firm’s financial standing. When we look closer and get into the intricacies of the day-to-day financial management of a firm, one thing that discloses itself is how the short-term financial decisions and liquidity position of a firm can impact the long-term vision and strategies of the organization. Thus, Working Capital Management (abbreviated WCM) ensures a sustainable growth and smooth functioning through balancing current assets and current liabilities. Through the case study of Asian Paints Ltd., it has been evident that how the components of working capital and its effective and efficient administration can contribute to the overall profitability and better financial management. The study explores the liquidity, profitability and efficiency of the organization through various financial ratios and gives a comparative analysis of the working capital over the period of five years (2020-2024). The primary objective of this study is to understand working capital and its management, and how effective handling of working capital can significantly impact a firm’s long-term financial health.