The significant policy shift which the economy of India had undergone during the 1990s commonly known as LPG or Liberalization, Privatization and Globalization had influenced the overall economic growth of the country. The primary objective of this model was to make the economy of India the fastest developing economy in the global market with capabilities that help it match with the biggest economies of the world. The chain of reforms and changes that took place with regards to business, manufacturing and financial services industry resulted in lifting the economy of the country to a more proficient level. One of the major contributors to this growth was the automobile manufacturing sector. The LPG policy was designed to make the Indian economy, progressive, market oriented and integrate with the emerging global economy. This lead to advanced technology and precise research and development activity which helped the Indian automobile industry to make significant growth in the last decades. After LPG began a number of foreign firms commenced joint ventures with existing Indian automobile companies and enhanced the variety of options of automobiles available to the consumers. One of the major aspects which lead to this growth proficiency and profitability is the "working capital". Fixed and working capital is necessary financial requirements of any industry to run through their relative share and the importance varies according to the nature of the industry. Implementing effective working capital helps to improve the earnings of the firm. Ratio analysis and management of individual components of working capital are the two main aspects of working capital management. Working capital management involves the relationship between short-term assets and short-term liabilities of the firm. The goal of working capital management is to ensure that the firm is able to continue its operations and that it has sufficient ability to satisfy maturing short-term debt. The working capital management involves the managing of inventories, accounts receivable and payable and cash. Considering the role and importance of working capital in the success of the companies, this project aims to study the relation between working capital and profitability of automobile industry in India.

The working capital has an effect on the liquidity as well on the profitability of the firm. So, it is important to study the role of working capital in the profit generating process. If the firm desire to improve liquidity, increases the size of working capital of the firm. On the other hand, if a company is interested to obtain a greater risk for greater profits, it decreases the size of working capital in relation to its sales. The firm should trade off between its profitability and liquidity and decide the size of its working capital requirement. The objective of any firm is to maximize the profit. But, maintaining liquidity of the firm is an important objective also.

The relationship between working capital management and profitability of Indian vehicle manufacturers is examined in this article for the period 2006-2020. The research is essential for investors, competitors, policymakers, and companies at the time since that operates as a growth direction. Thus, it is believed that a well-designed and managed working capital management system would contribute favorably to the profitability and value of the business. Efficient working capital management is crucial for every company organization's existence, liquidity, solvency, and profitability. Additionally, effective working capital management adds value to any business. To compete in a highly complicated and dynamic market, it is difficult for businesses to maximise their working capital as a true competitive advantage for profit leverage. To manage working capital optimally, the manager must carefully control the link between profitability and working capital components. As such, this study aims to quantify the link between working capital management and profitability for four Indian automotive passenger vehicle manufacturers included on the CMIE database. Multiple Backward Step Regression is used to analyse and derive conclusions from the data. The current asset turnover ratio was used as a dependent variable, whereas the components of working capital were used as independent variables. Additionally, the selling growth rate, business size, leverage, and age all have an effect on a firm's profitability. As a result, this article gives managers with new insight into how to increase their firm's profitability through effective working capital management.

Working capital management deals with the balance of current assets and liabilities. Working capital management maximizes the level of firms to an optimal value. With time evidence has shown a significant impact of working capital on the performance of firms. Working capital management addresses the management of companies' short-term capital and the objective of working capital management is to endorse satisfying profitability and minimize liabilities.Hence, the study examines the impact of working capital management on automotive manufacturing firms listed on the Pakistan Stock Exchange for the period 2007-2016. Profitability was measured by the performance of the firms by the rate of return on assets as the dependent variable. The cash conversion cycle, average payment period, inventory conversion period, and average collection period determined the working capital of the firms as independent working capital variables. Moreover, the control variable is firm size.The data was examined using EViews (version 10). The finding reveals that the average collection period, inventory conversion period, average payment period, and cash conversion cycle have an insignificant negative relationship with profitability. In the case of firm size, its relationship with profitability is positively significant. The value of R square reveals that our model is capturing 58% variation from independent and control variables. The value of F statistics indicates that our model is well fitted. In general collection payments from customers earlier and paying suppliers longer, keeping the product in stock less time, are all related to positive performance. Therefore, managers can increase a firm's profitability by improving the performance of management of working capital components. The study in this case is done with delicate methods and proper sample models taken from verified sources.

Working capital management is one of the management structure of an organization that plays a fundamental role and also is as a major force in evolution of the organization. So it is important to acquire economic profits. This study investigates the relationship between working capital policy and profitability of companies in automobile, pharmaceutical and mineral industries in Tehran Stock Exchange. The sample was selected consisting of 235 data -year of listed companies in Tehran Stock Exchange in automobile, pharmaceutical and mineral industries from 1383 to 1387. The methodology of this research was discriptive and the hypotheses were analyzed by using Pearson correlation and regression model.The results of this study indicate that there is no direct and significant relationship between working capital management strategies with earning per share and return on equity, but there is a direct and significant relation between working capital management strategies and return on investment but not very strong correlation, and only 6% of the variation in the return on investment can be justified by the variation in the working capital management strategies.

The current study investigates the impact of firm's specific factors such as its size, liquidity or leverage, cash flow, profitability, asset tangibility and growth opportunity on working capital management. Secondary data of 8 assembling companies working in the automobile sector of Pakistan economy has been extracted from the sector analysis report issued by the State Bank of Pakistan (SBP), covering a period of 9 years (2009 - 2017). Data was analyzed using multiple regressions. Results show that firms' size, leverage and asset tangibility has a negative significant impact on firm's working capital management. However, profitability, cash flow and growth opportunity have an insignificant impact on firm's working capital management. It was found that different firm characteristics make it necessary for firms to have different working capital policies that are much more suited to their situation. In fact, the non-parametric tests also indicate the presence of a sectorial/industrial effect that cannot be ignored. Hence, a better understanding of why firms adopt a specific working capital policy will allow financial institutions to determine whether the firms are justified in adopting a specific policy, and in evaluating their financial well being.

Bachelor Thesis from the year 2015 in the subject Business economics - Investment and Finance, grade: 1,3, Leuphana Universität Lüneburg (Institut für Bank-, Finanz- und Rechnungswesen (IBFR)), course: Bachelorkolloquium, language: English, abstract: The present thesis tries to figure out, if the Working Capital Management of German companies is reactive to changing interest rates for their refunding or if it is really a pro-active improvement since the beginning of the 2000s as claimed by the literature. After a theoretical definition of Working Capital, its functions, goals and its relationship to the management process, Working Capital will be set into a context of company crises to lead to the central object of investigation, the Global Financial Crisis. With a quantitative analysis via DataStream of the companies currently listed in the DAX, MDAX and SDAX (N=130) it will be examined, if the credit crunch for companies in the Global Financial Crisis and the easy refunding possibilities afterwards due to the easy money policy of the European Central Bank had effects on the quality of the Working Capital Management. The analysis of the data via SPSS will show, that the possibilities of refunding indeed influence this quality, whereby the intensity of the reactionary behaviour of the companies depends mainly on the object of cognition, which is in this thesis examined by the parameters size, age and industry sectors, so that the results could serve as a basis for further management research.