Abstract

The sustainability and growth skill of an enterprise is determined by an efficient financial management. Current asset financing is one of the most complex decisions for a financial manager. Excess of funds locked up in current assets adversely affects the firm’s scope for profitability whereas inadequacy in working capital may land the firm into serious trouble by landing it towards the risk of meeting its current obligation schedules. So a sound strategy and systematic approach to management of working capital is required to support a trade off between profitability and liquidity in an enterprise. The present study is a case study on working capital management of Numaligarh Refinery Limited (NRL), an emerging and flourishing enterprise in North East region. Data collected from Annual Reports of NRL for 16 years from 2004-2019 are used for the purpose. Descriptive statistics and OLS regression is used for the analysis. Johansen’s cointegration test and ARDL models are further used to study the relationship between profitability and liquidity. The study aims at capturing the present scenario of NRL and the need for reengineering its liquidity management to promote its mission of long term sustainability and growth in the global arena. Results indicate improvent in the overall working capital management scenario but at the same time a declining trend in both liquidity and profitability of the firm in the recent years in comparison to the previous half.

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