Working Capital Management: Impact on Profitability of Oil & Gas Industry in India

  • Dr. Pushparaj Kulkarni, Dr. Vivek Pimplapure

Abstract

Working capital is a capital needed for operational activity of a firm. This nature of capital is on normal course carrying a substantial weight in managing the overall financial perspective of a business. Working capital is prerogative area for financial in-charge as a significant impact of it can be controlled through appropriate management and optimally utilization the short term fund. Oil and Gas industry is investment heavy sector in terms of both capital nature as well as short term investments. As one school of thought said the impact is always there on profitability by working capital of a firm. Various elements of working capital affect profitability of a business. In the current paper the variables such as Current ratio (CR), Quick ratio (QR), Working Capital Turnover ratio (WCTR) and other associated ratios of working capital and how they affect profitability such as Return on capital employed (ROCE) and Return on total Asset (ROA) are investigated. Based on the above variables a linear regressive model has been plotted to estimate the sensitivity of profitability ratio to working capital ratio and attempt to plot the predicted values using the trends.

Keywords- Working Capital, profitability, CR, QR, ROCE, ROA

Published
2019-12-13
Section
Articles