Liquidity and working capital management- a case study of Constructon industry in Kerala, India

Working capital management is one of the most important and crucial function of financial management that ensures the smooth function of the business organisation and it denotes the index of sound position of the business. The success and failure of a business enterprise depends on how it can manage the liquidity and working capital. The finance manager of a business organisation is used to spend more time for managing the short term or working capital management. The purpose of this paper is to study the working management of the construction industry based on their financial statements. The area of studies is related to the working capital management of various components like Management of Cash and Marketable Securities, Management of Receivables, Inventory Management and Payable Management practices in the management of working capital. The key difference between long term financial management and short term financial management is in terms of the timing of cash. While long term financial decisions like buying capital equipment or issuing debentures involve cash flows over an extended period of time (5 to 15 years or even more), short term financial decisions typically involve cash flows within a year or within the operating cycle of the firm.