Relationship between Working capital and Profitability of Food and Beverage Product Industry

Abstract

Working capital plays a vital role in a business enterprise, as it helps the companies to maintain enough cash flow to meet its short-term goals and obligations. Working capital, or net working capital, is the difference between a company’s current assets and its current liabilities. Working capital management is important for Nestle industries, as they deal with numerous current assets and current liabilities. Data of Nestle India Limited was collected for five years from its secondary source and analyzed. The study helps to determine the impact of working capital on the firm’s profitability. Pearson’s correlation analysis was calculated to find the relationship between the firm’s working capital and its profitability. It was found that the relationship was positively correlated between working capital and profitability, and suggested the company maintain this positive relationship constantly without any further changes.