A Study on Working Capital Management and its Effect on Financial Performance in India

Organisation needs capital for meeting the short-term investment purpose which is required for day-to-day business operations. A type of capital that invests in short-term investments has a high quality and low risk. The objective of this type of capital is to protect the organisation’s finance with low level of risk in investment. Short-term assets investment can be made in cash, inventory, debtors, etc., this is termed as short-term funds or working capital. Thus, proper management of the current assets and the current liabilities of an organisation are needed, by this the concept of working capital management comes into existence. In a nutshell we can say that organisation short financing are referred to as working capital management. With this objective my paper presents the balance sheet concept, operating cycle concept and the factors determining working capital needs of organisation established in India.