A Study On Working Capital Management And It's Impact On Profitability At Vb Foam Manufacturing Company

Abstract

This Study Examines The Relationship Between Working Capital Management (WCM) And Profitability At VB Foam Manufacturing Of Polyurethane Foam & Allied Products, A Puducherry-based Company. The Research Analyzes Secondary Financial Data From 2020 To 2024, Including Balance Sheets And Profit And Loss Accounts. The Primary Objectives Are To Study The Components Of Working Capital And Assess Their Impact On The Firm's Profitability Using Ratio Analysis And Regression. Key Findings Reveal A Significant Deterioration In Financial Health In 2024. Despite Strong Receivable Collections, The Company's Liquidity Weakened, With The Current Ratio Falling From 1.54 To 1.20. Profitability Collapsed, As The Net Profit Margin Plummeted From 10.46% In 2023 To Just 0.10% In 2024, Driven By Rising Short-term Borrowings And Inefficient Asset Utilization. Regression Analysis Indicated That Working Capital Turnover Did Not Have A Statistically Significant Impact On Profitability (p > 0.05). The Study Concludes That While VB Foam Showed Past Efficiencies, Its Recent Sharp Decline Necessitates Urgent Improvements In Cash Management, Debt Reduction, And Asset Optimization To Ensure Financial Stability.

Keywords