working capital

■ Indian Journal of Commerce & Management Studies

ISSN – 2229-5674

SHORT-TERM LIQUIDITY MANAGEMENT- A STUDY OF INDIAN
STEEL COMPANIES

Dr. Amalendu Bhunia
Affiliation: Reader in Commerce, Fakir Chand
College under C.U., Diamond Harbour, West
Bengal, India. [e-mail] ABSTRACT
The overall efficiency is vital from the viewpoint of short-term liquidity and at the same time proper plane of profitability is required for the business enterprises. Consequently, the affiliation between short-term liquidity and profitability is one of the most imperative areas necessitating management analysis. In the present study, two private sector steel companies operating in India has been selected. For analysis, accounting ratios and statistical tools i.e., A.M., C.V., multiple correlation and regression has been used.
Keeping this in view, a study of managing liquidity of the selected private sector steel companies is undertaken in the present work.
Keywords: Secondary data, multiple regression analysis, financial management, Indian steel, performance.

■ Internationally Indexed Journal ■ www.scholarshub.net ■ Vol–II , Issue -4 May 2011 ■

151

■ Indian Journal of Commerce & Management Studies

ISSN – 2229-5674

Introduction:
Management of working capital has profitability and liquidity implications. That is why; working capital proposes a familiar front for profitability and short-term liquidity management. To reach optimal working capital management firm manager should control the trade off between profitability and short-term liquidity accurately. An optimal working capital management is expected to contribute positively to the creation of firm value.
The crucial part in managing working capital is required maintaining its liquidity in day-to-day operation to ensure its smooth running and meets its obligation (Eljelly, 2004). Liquidity plays a significant role in the successful functioning of a business firm. A firm should

References: [1] Steel Scenario yearbook. 2007. “Performance Highlights”, Steel Scenario Journal, Kolkata. [2] Steel Scenario yearbook. 2010. “Performance Highlights”, Steel Scenario Journal, Kolkata. [3] Agarwal, J.D. (1988), “A goal programming model for working capital management,” Finance India, Vol [4] Bhunia, A. (2010), “A trend analysis of liquidity management efficiency in selected private sector indian steel industry”, International Journal of Research in Commerce and Management, Volume-1 Issue-5 (Sep, 2010). [5] Chatterjee, M. 2007. “World Steel Industry and India”, Steel Scenario Journal, Kolkata, Vol. [6] Chakraborty, K. (2008), “Working Capital and Profitability: An Empirical Analysis of Their Relationship with Reference to Selected Companies in the Indian Pharmaceutical Industry,” The [7] Eljelly, A. (2004), “Liquidity-Profitability Tradeoff: An empirical Investigation in An Emerging Market”, International Journal of Commerce & Management, 14(2), 48 – 61. [8] Garcia-Teruel, P.J. and Martinez-Solano, P. (2007), “Effects of working capital management on SME profitability,” International Journal of Managerial Finance, Vol.3, Issue 2. [9] Rafuse, M.E. (1996), “Working capital management: an urgent need to refocus,” Management Decision, Vol [10] Raheman, A. & Nasr, M. (2007) Working capital management and profitability – case of Pakistani firms [11] Singh, P. (2008), “Inventory and Working Capital Management: An Empirical Analysis,” The Icfai University Journal of Accounting Research, Vol [12] Singh, J.P. and Pandey, S. (2008), “Impact of Working Capital Management in the Profitability of Hindalco Industries Limited,” The Icfai University Journal of Financial Economics,Vol [13] Lee, A.H.I. and Kang, H.-Y. (2008), “A mixed 0-1 integer programming for inventory model: A case study of TFT-LCD manufacturing company in Taiwan,” Kybernetes, Vol [14] Bhunia, A. (2007), “Working Capital and Liquidity Management of Iron and Steel Enterprises in India: A Comparative Study between SAIL and TISCO”, Unpublished UGC-Minor Research