| Abstract |
Abstract: This paper investigated the relationship between working capital efficiency and profitability of automobile manufacturing companies operating in India using a comparative time-series analysis of leading automotive manufacturers between 2010-2025. This research evaluated major elements of working capital, i.e., inventory turnover, accounts receivable & payable management, and the cash conversion cycle. Descriptive statistics, t-tests for independent samples, correlation coefficients, and regression models were used to evaluate working capital efficiency as well as its effect on Profitability measured by ROA. Results indicated that improved working capital efficiencies lead to increased firm profitability. Also, the positive effects of shortening the cash conversion cycle and optimal management of inventory and accounts receivable have been found to be related to improvements in firm profitability. In addition to this, the results indicate that firms consistently managing their working capital are more stable and also achieve higher levels of profitability than those firms who do not manage their working capital. These findings emphasize the importance of optimizing working capital in highly capital intensive sectors. |
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