Working Capital Management and Profitability : An Empirical Analysis of Infrastructure Companies

Abstract

Working capital management plays a vital role in any business organization. It reveals the management's efficiency of decision making regarding short-term financing need of the business. Working capital management of the construction industry differs from that in other industries due to its uniqueness such as legal and tax policy, _financial closure, supply chain and logistics, credit policy, political-social technological- economic condition, stake holders etc. and their relationship with projects. This study focuses on the effect of working capital on the profitability of two infrastructure companies, viz. L& T and NB CCL, for the period 2009-2015. The financial data has been collected from the websites of these two companies' and other authorized reports such as balance sheet, profit and loss statement, annual report ere. It was observed that while working capital has an insignificant impact on profitability/or some parameters, it has a significant impact on profitability in respect of some other parameters.