A Study on Financial Performance Analysis of Tata Steel and Jindal Steel Works

Literature Review

Financial performance analysis is vital for the achievement of an enterprise. Financial performance analysis is an appraisal of the feasibility, solidity and productivity of a business. The different opinion observed during the study are as discussed below:

Samiloglu & Damirgunes (2008) pointed that even the profitability is constantly positive, inaccurate working capital management procedures may lead to bankruptcy of the firm. They suggest that current, acid test, and cash ratios measures of liquidity ratios are incompetent cannot provide detailed and accurate information about working capital management effectiveness. Nandi (2011) attempted to examine the influence of working capital management on corporate profitability. An attempt had been undert aken for measuring the sensitivity of return of investment (ROI) to changes in the level of working capital leverage (WCL) of the studying company.

Cheakraborty (2008) evaluated the relationship between working capital and profitability of 25 selected companies of a particular industry. Inadequacy of working capital may lead to the firm to insolvency, whereas excessive working capital implies idle funds, which earn no profits. Therefore, efficient management of working capital is an integral part of the overall corporate strategy to improve corporate profitability. Singh and Pandey (2008) said that working capital management is the management of current assets and current liabilities. Maintaining high inventory levels reduces the cost of possible interruption in the production process or of loss of business due to the scarcity of products, reduces supply costs and protects against price fluctuations.