| SMART JOURNAL OF BUSINESS MANAGEMENT STUDIES |
VOL. 20 |
NO. 2 |
PAPER 3 |
10.34293/2321-2012.2024.0002.3 |
EFFECT OF GST ON WCM AND PROFITABILITY OF FMCG SECTOR IN INDIA |
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| Karanam Kavitha * and Chandra Sen Mazumdar** |
| * Research Scholar, FMC, RUAS, M S Ramaiah University of Applied Science, Bengaluru, 560054 |
| ** Assistant Professor, FMC, RUAS, M S Ramaiah University of Applied Science,
Bengaluru, 560054
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| Working capital primarily consists of a company’s current assets, or the part of its financial resources that are converted from one kind of resource to another as operations are carried out on a daily basis. Working capital management is regarded as a key component of a company’s profitability. This study examines the working capital relationship with firm’s profitability. An optimal working capital is essential for enhancing the value of an organization. The impact of GST is significantly evident on all transactions of FMCG sectors, especially during stock transfer between two branches of a company, during which period the funds get blocked. This study considered 55 FMCG manufacturing firms, listed in BSE for a period of 12 years starting from 2012 to 2023. Multiple regression model was used to test the hypothesis. The study established a low working capital turnover ratio, which indicates quick realization of inventory, and creates the demand for funds to procure more stock for production purpose. The working capital turnover was used to gauge aggressive investing practices. An aggressive investment strategy is indicated by a low working capital turnover ratio, and a conservative strategy is indicated by a high ratio.
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