Impact of Working Capital Management Policy on Profitability
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Working capital management is about the management of current assets and current liabilities, in such a way that a satisfactory level of working capital which maximizes the profits of the firm is maintained. The basic theme of working capital management is to provide adequate support for smooth and efficient functioning of normal day-to-day business operations, by striking a trade-off between the three proportions of working capital they are liquidity, profitability and risk. In the present environment of cut throat competition business does not have any other alternative, than cutting the cost of its operations in order to be competitive, as well as financially strong; it is in this connection that effective management of working capital plays a vital role. According to Mallik et al.