A Study On Effectıve Utılızatıon Of Inventory By Cement Manufacturıng Companıes In Indıa

Abstract

Inventories often constitute a major element of the total working capital and hence it has been correctly observed, ‘good inventory management is good financial management.’ Inventory needs to be managed effectively because of various reasons such as for the smooth functioning of the business, to fulfill the expectations of demand, to avoid a stock-out situation, and to seek protection from price increases in the near future. The main objectives of the study are to analyze the size of inventory in assets, conversion cycle, and to find the effective utilization of inventory in the select sample units during the study period. The analytical research design was adopted for the present study. The universe for the study consists of the top 4 cement manufacturing companies in terms of their market capitalization listed on the Bombay Stock Exchange. The present research is based on secondary and covers for ten years i.e. from 2008-09 to 2017-18. Both statistical, as well as financial tools are used for the analysis of data in this study. The study found that the proportion of inventory in current assets is very low in private cement companies. The study observed that the conversion period is high in private cement companies, which is a negative impact on sales and profitability. A low sale to inventory is observed in private cement companies, indicates ineffective utilization of inventory. Therefore, the study suggested improving their efficiency for the effective utilization of inventory.