corporate liquidity management

332 Pages·2014·13.64 MB·English

“CORPORATE LIQUIDITY MANAGEMENT-

A STUDY WITH REFERENCE TO NIFTY-50
COMPANIES”

A THESIS
SUBMITTED TO KUMAUN UNIVERSITY
FOR THE DEGREE OF
DOCTOR OF PHILOSOPHY

By
CHARU AGARWAL
Under The Supervision Of
Dr. Dharmendra Kumar
Assistant Professor
Department Of Commerce and Management Studies
S.V. Government PG College, Lohaghat

DEPARTMENT OF MANAGEMENT
(KUMAUN UNIVERSITY, NAINITAL)
2014

Contents
Page No.
Chapter-1 Introduction 1-22
1.1 Operating Cycle 3-4
1.2 Meaning of Liquidity 4-11
1.3 Liquidity Management 11-14
1.4 Concepts of working capital 14-16
1.5 Misunderstanding of profit for cash 16-17
1.6 Profitability vs. Liquidity 17-19
1.7 Strategies for managing of liquidity 19-21
1.8 Behavioral aspects of liquidity management 21-22
1.9 Requirement to study corporate liquidity management 22
Chapter-2 Review of Literature 23-35
Chapter-3 Research Methodology 36-52
3.1 Rationale of the study 36-37
3.2 Nature of the study 37-38
3.3 Research methodology 38-40
3.4 Database 40
3.5 Analysis & Interpretation of data 40
3.6 Financial & statistical techniques 41-50
3.7 Description of the variables 50-51
3.8 Objectives of study 51
3.9 Hypotheses of the study 51-52
3.10 Chapter scheme 52
3.11 Limitation of the Study 52
Chapter- 4 Description of the companies selected 53-87
4.1 Cement Companies 53-55
4.2 Banking Companies 55-59
4.3 Financing Companies 59
4.4 Energy Companies 60-63
4.5 Pharmaceutical Companies 63-66
4.6 Construction & Engineering Companies 66-67
4.7 Information Technology Companies 67-68
4.8 Automobiles Companies 68-70
4.9 Metal Companies 70-72
4.10 Consumer Goods Companies 72-74
4.11 Mining Companies 74-75
4.12 Telecommunication Company 75
4.13 Brief profile of companies at a glance 76-87
Chapter-5 Analysis and Interpretation of data 88-239
5.1 Cement Companies 90-111
5.2 Energy Companies 111-129
5.3 Telecommunication Company 130-133
5.4 Pharmaceutical Companies 133-148
5.5 Construction & Engineering Companies 148-156
5.6 Information Technology Companies 156-168
5.7 Automobiles Companies 168-182
5.8 Metal Companies 183-196
5.9 Consumer Goods Companies 196-209
5.10 Mining Companies 209-217
5.11 Banking Companies 217-232
5.12 Financing Companies 233-239

Chapter-6 Findings and suggestions 240-257
Major findings 240-252
Suggestions 252-257
Bibliography
Annexure
List of Tables
Table no. Title Page no.
5.1a Current ratio of nifty 50 cement companies 91
5.1b Quick ratio of nifty 50 cement companies 92
5.1c Super Quick ratio of nifty 50 cement companies 93
5.1d Inventories to current assets ratio of nifty 50 cement companies 94
5.1e Receivables to current assets ratio of nifty 50 cement companies 95
5.1f Cash & bank to current assets ratio of nifty 50 cement companies 96
5.1g ROCE of nifty 50 cement companies 97
5.2a Calculation of ‘r’ &‘t’ between CR & ROCE of nifty 50 cement
Companies 99
5.2b Calculation of ‘r’ &‘t’ between QR & ROCE of nifty 50 cement
Companies 99
5.2c Calculation of ‘r’ &‘t’ between SQR & ROCE of nifty 50 cement
Companies 100
5.2d Calculation of ‘r’ &‘t’ between I/CA & ROCE of nifty 50 cement
Companies 100
5.2e Calculation of ‘r’ &‘t’ between R/CA & ROCE of nifty 50 cement
Companies 101
5.2f Calculation of ‘r’ &‘t’ between Cash/CA & ROCE of nifty 50 cement
Companies 102
5.3a Component of WC of nifty 50 cement Companies 106
5.3b vibrant table for working capital components of nifty 50 cement
Companies 107
5.4 Correlation, coefficient of determination and Probable error between
Sales & WC of nifty 50 cement Companies 109
5.5 Motaal’s comprehensive test of liquidity of nifty 50 cement Companies 110
5.6a Current ratio of nifty 50 energy companies 111
5.6b Quick ratio of nifty 50 energy companies 112
5.6c Super Quick ratio of nifty 50 energy companies 113
5.6d Inventories to current assets ratio of nifty 50 energy companies 114
5.6e Receivables to current assets ratio of nifty 50 energy companies 115
5.6f Cash & bank to current assets ratio of nifty 50 energy companies 116
5.6g ROCE of nifty 50 energy companies 117
5.7a Calculation of ‘r’ &‘t’ between CR & ROCE of nifty 50 energy
Companies 118
5.7b Calculation of ‘r’ &‘t’ between QR & ROCE of nifty 50 energy
Companies 119
5.7c Calculation of ‘r’ &‘t’ between SQR & ROCE of nifty 50 energy
Companies 120
5.7d Calculation of ‘r’ &‘t’ between I/CA & ROCE of nifty 50 energy
Companies 121
5.7e Calculation of ‘r’ &‘t’ between R/CA & ROCE of nifty 50 energy
Companies 122
5.7f Calculation of ‘r’ &‘t’ between Cash/CA & ROCE of nifty 50 energy
Companies 123
5.8a Component of WC of nifty 50 energy Companies 124
5.8b vibrant table for working capital components of nifty 50 energy
Companies 125
5.9 Correlation, coefficient of determination and Probable error between
Sales & WC of nifty 50 energy Companies 126
5.10 Motaal’s comprehensive test of liquidity of nifty 50 energy Companies 129
5.11 Important ratios of Bharti Airtel 130
5.12 Component of WC of Bharti Airtel 131
5.13 Relationship between Income & WC of Bharti Airtel 132
5.14a Current ratio of nifty 50 Pharmaceutical companies
133
5.14b Quick ratio of nifty 50 Pharmaceutical companies 134
5.14c Super Quick ratio of nifty 50 Pharmaceutical companies 135
5.14d Inventories to current assets ratio of nifty 50 Pharmaceutical companies 136
5.14e Receivables to current assets ratio of nifty 50 Pharmaceutical companies
137
5.14f Cash & bank to current assets ratio of nifty 50 Pharmaceutical companies

138
5.14g ROCE of nifty 50 Pharmaceutical companies 139
5.15a Calculation of ‘r’ &‘t’ between CR & ROCE of nifty 50 Pharmaceutical
Companies 140
5.15b Calculation of ‘r’ &‘t’ between QR & ROCE of nifty 50 Pharmaceutical
Companies 140
5.15c Calculation of ‘r’ &‘t’ between SQR & ROCE of nifty 50 Pharmaceutical
Companies 141
5.15d Calculation of ‘r’ &‘t’ between I/CA & ROCE of nifty 50 Pharmaceutical
Companies 142
5.15e Calculation of ‘r’ &‘t’ between R/CA & ROCE of nifty 50 Pharmaceutical
Companies 142
5.15f Calculation of ‘r’ &‘t’ between Cash/CA & ROCE of nifty 50
Pharmaceutical Companies 143
5.16a Component of WC of nifty 50 Pharmaceutical Companies 144
5.16b vibrant table for working capital components of nifty 50 Pharmaceutical
Companies 145
5.17 Correlation, coefficient of determination and Probable error between
Sales & WC of nifty 50 Pharmaceutical Companies 146