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Growing Science » Accounting » Working capital, profit and profitability: An absolute and relational study of selected leading Indian pharmaceutical firms

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Accounting

ISSN 2369-7407 (Online) - ISSN 2369-7393 (Print)
Quarterly Publication
Volume 6 Issue 6 pp. 951-960 , 2020

Working capital, profit and profitability: An absolute and relational study of selected leading Indian pharmaceutical firms Pages 951-960 Right click to download the paper Download PDF

Authors: Anis Ali

DOI: 10.5267/j.ac.2020.8.001

Keywords: Working capital, Indian pharmaceutical, Relational analysis, Rank correlation, Profitability

Abstract: The working capital of the business organization is the excess of current assets over current liabilities. The working capital (WC) governs sales of the business organization directly while sales define the profits. Working capital activates the fixed resources and utilizes the factors of production and it is a bases for the production of goods and services. Working capital is the factor that plays a vital role in the enhancement of sales turnover and profits, ultimately. The present study considers and covers the financial data of selected Indian pharmaceutical companies for the period 2013-2018 for the study of the impact of profitability of the working capital on sales and profits. Ratio analysis is the base of the study while some statistical techniques are to be used to get the mutual relationship, trend, and co-movement of the WC and sales, earnings before interest, depreciation, and tax (EBIDT), profit before tax (PBT), and profit after tax (PAT) of the selected Indian pharmaceutical companies. The combined inferences of the absolute and relational study explain that the WC governs the profit positively but not proportionately. There is a need to control the indirect expenses or non-manufacturing expenses of the business to enhance the profitability corresponding to WC movement.

How to cite this paper
Ali, A. (2020). Working capital, profit and profitability: An absolute and relational study of selected leading Indian pharmaceutical firms.Accounting, 6(6), 951-960.

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Journal: Accounting | Year: 2020 | Volume: 6 | Issue: 6 | Views: 2361 | Reviews: 0

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