Implication of Working Capital Management on the Profitability: A Case of ONGC Ltd, India


  • Dr. Vinay Kandpal Department of Accounting and Finance, College of Management & Economics Studies University of Petroleum and Energy Studies, Dehradun. (Uttarakhand), India.
  • Prof P C Kavidayal Head, Department of Management of Studies, Bhimtal (Kumaun University, Nainital), India.


Working capital management, ONGC, Current Assets, Profitability & Liquidity


Financial Management basically deals with raising of financial resources and its proper allocation in order to maximize shareholders wealth. For a successful running of an organization fixed and current assets play a crucial role as organization generally  invests in these options. A firm’s working capital consists of its investments in short-term assets like cash and bank balance, inventories, receivable and short term investments. Therefore, the working capital management mainly refers to the management of all these individual current assets. In this research paper an attempt has been made to study the components of working capital and the possible implications of working capital management policies on profitability of ONGC Limited. The paper also attempts to analyze the correlation between liquidity, profitability and return on investments of ONGC. The study is based on secondary data collected from annual reports of ONGC for the period 2000 to 2012. In this paper there is an application of correlation and regression analysis to identify the significant impact of Working capital management on the profitability. Working capital Management is essential as it might have a direct impact on profitability and liquidity.


Anand M., (2001), Working Capital Performance of corporate India: An empirical survey; Management and Accounting Research Vol. 4, No. 4, pp 33-65.

Blinder A. S., Manccini L. J. (1991), “The Resurgence of Inventory Research: What Have We Learned?” Journal of Economic Survey, Vol. 5, No. 4, pp. 291-328.

Brennan M, Maksimovic V. , Zechner J (1988), “Vendor Financing”, Journal of Finance, Vol. 43, No. 5, pp. 1127-1141.

Burns, R and Walker, J. (1991), A Survey of Working Capital Policy among Small Manufacturing Firms; The Journal of Small Business Finance, Vol. 1, No1, pp 61- 74.

Cohn R A and Pringle J. J. (1975), “Steps Towards an Integration of Corporate Financial Theory”, in Keith V Smith (Ed.), Management of Working Capital: A Reader, p. 369, West Publishing Company, New York.

Deloof, D. (2003), Does Working Capital Management affect Profitability of Belgian Firms? Journal of Business Finance and Accounting Vol. 30 No.3&4, pp 573-587.

Emery G W (1987), “An Optimal Financial Response to Variable Demand”, Journal of Financial and Quantitative Analysis, Vol. 22, No. 2, pp. 209-225

Emery G W (1987), “An Optimal Financial Response to Variable Demand”, Journal of

a. Finance, Vol. 43, No. 5, pp. 1127-1141.

Gitman L J (1982), “Cost of Capital Techniques Used by Major US Firms: A Survey and Analysis of Fortune’s 1000”, Financial Management, Vol. 11.

Grass M (1972), Control of Working Capital, pp. xi-xiii, Grower Press Limited, Essex.

Harinath Reddy, S. (2001), Working Capital Management in Small Scale Industry; Finance India, Vol. 15, No. 2, pp 658-664.

Hawawini, G., Viallet, C. and Vora, A. (1986), Industry influence on corporate working capital decisions; Sloan Management Review, Vol. 27, No. 4, pp 15-24.

Joseph Kerstien and Atul Rai, (2007), Working Capital Accruals and Earnings Management; Investment Management & Financial Innovations, Vol. 4 No. 2.

Kessevan Pandachi, (2006), Trends in Working Capital Management and its impact on firm’s performance: An analysis of Mauritian Small Manufacturing Firms; International Review of Business research papers Vol. 2, No. 2, pp 45-58.

Mulla, A. Mansur, (2001), Forecasting the viability and operational efficiency by the use of ratio analysis - a case study; Finance India, 893-897.

Ng C K, Smith J K and Smith R L (1999), “Evidence on the Determinants of Credit Terms Used in Inter Firm Trade”, Journal of Finance, Vol. 54, No. 3, pp. 1109-1129.

Pedro Juan Garcia-Teruel and Pedro Martinez-Solano, (2007), Effects of Working Capital Management on SME Profitability; International Journal of managerial finance, Vol. 3, No. 2, pp 164-177.

Peel, M.J. Wilson, N. (1996), Working Capital and Financial Management Practices in the small firm sector; International Small Business Journal, Vol. 14, No. 2, pp 52-68.

Petersen M A, Rajan R G (1997), “Trade Credit: Theories and Evidence”, Review of Financial Studies, Vol. 10, No. 3, pp. 661-691.

Raheman Abdul, Nasr, Mohamed, (2007), Working Capital Management and Profitability- Case of Pakistani Firms; International Review of Business Research Papers 3, pp 279-300.

Ramachandra Reddy, (1992), Working capital management of co-operative sugar mills, Tamil Nadu; Financial management in co-operatives, Print well Publishers, 103 – 124.

Ranjith Appuhami B.A. (2008), The Impact of firms Capital Expenditure on Working Capital Management: An Empirical study across Industries in Thailand, International Management Review, Vol. 4, No. (1), pp 11-24.

Rao, R.K.S, (1989), Fundamentals of Financial Management, 3rd Edition, Macmillan Publishers.

Saravanan, P. (2001), a study on working capital management in Non-Banking Finance Companies; India Vol. 15, No. 3, pp 987-994.

Shin, H H and Soenen, L. (1998), Efficiency of Working Capital and Corporate Profitability, Financial Practice and Education, Vol. 8, No. 2, pp 37-45.

Singh, J. P, and Shishir Pandey, (2008), Impact of Working Capital Management in the Profitability of Hindalco Industries Limited; The ICFAI University Journal of Financial Economics, Vol. 6, No. 4, pp 62-72.

Smith K (1980), “Profitability versus Liquidity Trade off in Working Capital Management”, in Smith K. K. and St. Paul (Eds.), Reading on the Management of Working Capital, pp. 549-562, West Publishing Company.

Smith M B (1997), “Modelling Association Between Working Capital and Operating Profit: Survey Findings”, Journal of Financial Management and Analysis, pp. 51-61.

Soenen, L. (1993), Cash conversion cycle and corporate profitability; Journal of Cash Management, Vol.13, No. 4, pp 53-57.

Surendra, S., Jain, P.K., and Rastogi Ashih, K., (2001), Working Capital Management in oil industry in India; The Management Accountant, Vol. 45, No.11, pp 511-525.

Vishnani , Sushama and Shah, Bhupesh Kr., (2007), Impact of Working Capital Management Policies on Corporate Performance – An Empirical Study; Global Business Review, Vol. 8, No.2, pp 261-281

Weinraub, H. and Visscher, S. (1998), Industry practice related to aggressive / conservative working capital policies; Journal of Financial and Strategic Decisions Vol. 11, No.2, pp 39-46.

Wilner B S (2000), “The Exploitation of Relationships in Financial Distress: The Case of Trade Credit”, Journal of Finance, Vol. 55, No. 1, pp. 153-178.

Yadav, Rakesh, Kamath, Vani and Manjrekar, Pradip, (2009), Working Capital Management: A study of Maharashtra’s bulk drugs listed companies; Chemical Business, pp 27-34.




How to Cite

Dr. Vinay Kandpal, & Prof P C Kavidayal. (2022). Implication of Working Capital Management on the Profitability: A Case of ONGC Ltd, India. Indian Journal of Commerce and Management Studies, 4(2), 49–53. Retrieved from