A STUDY ON REVIEW ON WORKING CAPITAL MANAGEMENT AND PROFITABILITY OF ORGANISED RETAIL SECTOR

The main aim of this study is to examine the effect of working capital on profitability of Indian organized retail firms. The purpose of this literature review is to describe working capital concepts, to outline existing WCM performance measurement concepts and to identify value drivers that have been identified, analyzed and tested. There has been some research in the field of working capital management and how it can influence on profitability. Gaps in the existing studies show that there is a need to make a fresh attempt to diagnose the ‘quick wins’ and longer-term working capital improvement opportunities. Working capital is a prevalent metric for the efficiency, liquidity and overall health of a company. It is a reflection of the results of various company activities, including revenue collection, debt management, inventory management, cash conversion cycle, average collection period, average payment period. The needs for working capital vary from industry to industry , and they can even vary among similar companies. This is due to several factors including differences in collection and payment policies, firm’s production policy, operating efficiency, credit policy, availabilty of raw materials, nature of business, etc. A well designed and implemented working capital management is expected to contribute positively to the creation of firm’s value.