Neglecting Working Capital Management Leads to Business Failures, Study Finds
Working capital management is crucial for businesses, but often overlooked. A study on Andhra Pradesh Power Generation Corporation analyzed its working capital from 2005 to 2010. They found that debtors make up a large part of the company's capital, while cash balances are neglected. The study also revealed that certain working capital ratios, like current ratio and inventory turnover ratio, have a negative impact on profitability, while others, like working capital turnover ratio and debtor turnover ratio, have a positive impact.