An Analytical Study of Working Capital Management in Public Sector Units: A Comparative Evaluation

Abstract

The effective management of working capital is crucial for the smooth functioning and profitability of a business, especially for public sector units (PSUs) that operate within regulated environments. This study examines the components and management of working capital, with a particular focus on inventory, receivables, and current liabilities. The research evaluates four PSUs in the chemical and fertilizer sector over three years, analyzing their working capital trends using financial ratios, such as the current ratio, quick ratio, and Altman Z-Score. The findings reveal significant variations in working capital strategies across companies, with some showing improved profitability despite challenges, while others struggle with liquidity issues. The study offers insights into the importance of balancing liquidity and profitability in maintaining long-term financial health.