Effectofworkingcapital

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EFFECT OF WORKING CAPITAL ON THE PROFITABILITY WITH REFERENCE TO

COGNIZANT AND WIPRO IN HYDERABAD
Article · April 2018
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Journal of Advanced Research in Dynamical and Control Systems Vol. 9. Sp– 18 / 2017
EFFECT OF WORKING CAPITAL ON THE PROFITABILITY WITH

REFERENCE TO COGNIZANT AND WIPRO IN HYDERABAD
Bhavana Reddy Jaggavarapu1, Dr B.Kishore Babu2

1
Research Scholar, KLU Business School, K L University, Vaddeswaram,A.P India
2
Assoc. Professor, KLU Business School, K L University, Vaddeswaram,A.P India
jbhavanareddi@gmail.com, kishorebabu11@kluniversity.in
ABSTRACT
Every organization whether public or private profit oriented or not, irrespective of its size and
nature of business needs an adequate amount of working capital. The efficient working capital
management is the most crucial factor in maintaining survival, liquidity, solvency, and
profitability of any business organization. Efficient management of working capital helps to
avoid the financial crisis, increasing the profitability and enhances the firm‟s value. The fixed
and current assets play a vital role in the success of any company. Maintaining the working
capital is mandatory because it has a huge significance on profitability and liquidity of business
concern. The increase in working capital helps in improving liquidity. Thus a company needs to
correct balance between the liquidity position and the profits of the company and various factors
influencing on working capital. The study is conducted to know the profitability and liquidity
position of the selected information technology companies like Wipro and Cognizant.
Keywords: profitability, liquidity, current ratio, quick ratio, working capital
1 INTRODUCTION
Adoptions associated with working capital (WC) entail controlling interactions between a firm 's
short-term assets as well as liabilities to make certain that a firm can continue the operations of
its, as well as have sufficient cash flows to fulfill both maturing short-term debts and future
operational expenses at costs that are minimal, and so, increasing business profitability. Working
capital is known as revolving or perhaps circulating capital or even short-term capital. [1][2].
When a business entity takes the decisions relating to its present assets and existing liabilities it
could be called as working capital management. The management of working capital may be
JARDCS Special Issue On Engineering Technology 1453

identified as an accounting strategy which highlights on maintaining appropriate levels of both

present assets and present liabilities [8][9]. Working capital management provides sufficient cash
to satisfy the short-term obligations of a firm. [11][12]. Generally speaking, observed evidence
correlated to working capital management and profitability has authenticated the fact that
managers can create value for shareholders by shortening the cash conversion cycle to the
shortest rational amount of time [5][ 7][10].
Figure 1 :A classic working capital cycle (Source: Arnold, 2008:530)

In Fig.1 the summarization of working capital cycle that initiates with the order of raw materials
which may be discovered in the inventory. Subsequently, these raw materials are actually
converted in finished products. These products are filled in the inventory until they're offered to
a consumer. The sale can be bought by money or even by trade credit. This trade recognition
provides a delay until the money is actually received. With each and every step of the cycle
however, there are actually associated expenses, which are actually opportunity costs and direct
Costs [3][4][6].
1.1 Statement of the problem

One of the primary functions of any firm is maximizing the profit. Nevertheless, keeping
liquidity of the firm also is a crucial goal. The strategy of the firm should be a balance between
these two goals. Since the benefits of profitability and liquidity are actually the same thus, one
aim shouldn't be at the cost of the other. If firm ignores about earnings, the firm can't endure for
an extended period. This study required to set the influence of working capital management on
the profitability in merchandise businesses in Hyderabad. Data gathered and the suggestions are
going to help to build a far more complete and economical sustainability and, therefore, enhance
the economic and also social advantages of the merchandise businesses to the nation.
1.2 Objectives of the study
1. To study the working capital position of the Wipro and Cognizant.
2. To analyze the relationship between working capital and profitability with reference to IT
companies like Wipro and Cognizant.
3. To find out the relationship between profitability and liquidity of Wipro and Cognizant.
4. To make the suggestions for improvement and successful survival in the market.
2 REVIEW OF RELATED LITERATURES

Bhunia and Khan (2011) assessed the effectiveness of Indian steel business by the real
management of liquidity.
Abuzar M.A. Eljelly (2004) in their paper titled A Study of Managing Liquidity” interpreted that
effective liquidity management entails planning and managing of current liabilities and current
assets in such a fashion which removes the vulnerability of failure to meet due short term
compulsions as well as stays away from increased purchase in the assets. The relation between
profitability as well as liquidity was validated, the analysis concluded that the hard cash
conversion cycle is actually getting much more value as a degree of liquidity as opposed to the
present ratio which affects profitability. The size variable was discovered to have a considerable
impact on profitability at the business level.
L. Ganesamoorthy and R. Rajavathana (2013) in their paper titled “Effects of working capital
management on profitability of select automobile companies in India” took two automobile
companies namely Tata motors and M&M ltd, and their results showed that both the companies
had an insignificant relationship with profitability.

Huynh Phuong Dong and Jyhtay Su (2010) scrutinized the connection between profitability,
money transformation cycle as well as the components of listed companies in Vietnam stock
market. The outcomes exhibited that there would be a powerful bad relationship between
profitability as well as the cash conversion process cycle. The less amount of time frame that
could associate with several of the prior studies about the connection between management of
working capital as well as firm profit.
Kaushikchakraborty (2008) an attempt has been made in this study to evaluate the inter
relationship between working capital management and profitability of 25 selected
pharmaceutical companies in the Indian pharmaceutical industry during the period from 1996-97
to 2007-08.
Azhagaiah Ramachandran and Muralidharan Janakiraman (2009) in their paper titled, “The
Relationship between Working Capital Management Efficiency and EBIT” concluded that the
Paper Industry has managed the Working Capital satisfactorily.The Paper Industry in India
Performs remarkably well during the study period, however, less profitable firms wait longer to
Pay their bills, and pursue a decrease in Cash Conversion Cycle.
RiteshJayantibhai Patel and KalpeshPrajapati (2012) in their paper titled, “A Comparative Study
on Working Capital Management of Selected Steel Companies of India”, the study was done to
know the comparative position of steel companies in working capital management and applying
various analyses such as size- wise analysis, ratio analysis & operating cycle analysis by taking
data from year 2006 to 2011.The study is done on five steel companies namely, Steel Authority
of India Ltd., Tata Steel Ltd., JSW Steel Ltd., Essar Steel Ltd. & Jindal Steel & Power Ltd. The
study reveals that Tata steel ltd has the highest growth of net working capital.
3 METHODOLOGY
Below Figure.2 presents schematic conceptual framework of the association between working
capital management measures and profitability of firms.

Figure 2: Schematic Conceptual Framework
3.1 Source of the Data

A study of Indian industry has been made by using data from financial statements of two
companies Wipro and Cognizant. The present study is based on secondary data. The financial
data edited, classified and tabulated as per the requirements of the study. The study was
conducted on the financial data of selected organization form the year 2012-2016.The secondary
data used in this study has been taken from the published annual reports of Wipro and Cognizant.
For the purpose of analysis of data ,various ratios relating to cash position and cash management
is calculated by using mean, variance, T-Test, and correlation test is applied to analyze the
consistency. The present study is converted into relative measures such as ratios, and
percentages.

Working Capital (WC) = Current Assets (CA) - Current Liabilities (CL)

Current Ratio (CR) = Current Assets / Current Liabilities
Quick Ratio (QR) = Quick Assets/ Current Liabilities
Cash Ratio = Cash+ Marketable Securities/ Current Liabilities
Earnings before Interest and Taxes (EBIT) = Sales Revenue – Expenses
Working Capital Turnover Ratio (WCTR) = Sales/Working Capital
Return on Equity (ROE) = Net Profit/Net worth
Return on capital employed (ROCE) = EBIT / Capital Employed
3.2 Analysis and Interpretation

Ho: There is no association between performance of Wipro and Cognizant.
Ho: There is no relationship between profitability and Working Capital of Wipro and
Cognizant.
a) Working capital Management:
Table-1
Working Capital (Cr.)

Year Wipro Cognizant
2011-12 28421.6 16778.20
2012-13 22490.2 17745.08
2013-14 17688.6 25921.00
2014-15 12260.6 27140.00
2015-16 13717.6 24180.00
T-Test: Paired Two Sample for Means
Wipro Cognizant
Mean 18915.72 22352.86
Variance 43988890 22823811
Observations 5 5
Pearson Correlation -0.9089

Hypothesized Mean Difference 0

df 4
t Stat -0.68905
P(T<=t) one-tail 0.264339
t Critical one-tail 2.131847
P(T<=t) two-tail 0.528678
t Critical two-tail 2.776445
The above Table-1 reveals that the Wipro working capital for the year 2012 was 28421.6 Cr.
whereas in the years 2013 to 2015 the working capital has gradually decreased to 121260.0 Cr.
which indicates that the firm has less capital for its day to day operations and in the year 2016
working capital has been increased to 13717.60 Cr. The Cognizant working capital for the years
from 2012 to 2015 was gradually increased from 16778.20 Cr. to 27140.00 Cr. and decreased to
4180.00 Cr in 2016. It depicts that the firms do not have adequate funds for their day to day
operations and hence could maintain sufficient funds in the respective years.
The mean and variance values of working capital for Wipro and Cognizant were 18915.72 and
22352.86, 43988890 and 22823811. The Pearson correlation is -0.9089, the t -static value is -
0.68905, p value is 0.264399 is less than the t critical value 2.131847 in one tail test, and p value
is 0.528678 ,which is less than the t critical value 2.776445 in two tail test. Hence it concludes
that there is a negative correlation between Wipro and Cognizant working capital and there is a
significant difference between Wipro and Cognizant at 0.05 significant levels of one and two tail
tests.
Working capital Management

Capital(Cr.)
Working

30000
20000
Wipro
10000
Cogniza
nt
0
2011-12 2012-13 2013-14 2014-15 2015-16
Year

Figure 3: Working Capital Management
b) Current Ratio of Wipro and Cognizant

Table-2
Current Ratio
2011-12 2.17 3.38
2012-13 1.76 3.46
2013-14 2.19 2.60
2014-15 2.30 2.91
2015-16 2.71 3.56
T-Test: Paired Two Sample for Means

Wipro Cognizant
Mean 2.226 3.182
Variance 0.11533 0.16802
Observations 5 5
earson Correlation 0.0774762
Df 4
t Stat -4.17806
P(T<=t) one-tail 0.0069701
P(T<=t) two-tail 0.0139401
The above Table-2 reveals that the Wipro current ratio for the year 2012 was 2.17, whereas in
the years from 2013 to 2016 the current ratio has gradually increased from 1.76 to 2.71, which

indicates that the firm has satisfactory performance in comparison with the normal standard of
2:1. The Cognizant current ratio for the year 2012 to 2016 was gradually increasing and
decreasing from 3.38 to 3.56 respectively. Hence it concludes that the current ratios of Wipro
and Cognizant are satisfactory in the respective years.
The mean and variance values of current ratios for Wipro and Cognizant were 2.226 and 3.182,
0.11533 and 0.16802. The Pearson correlation is 0.0774762, the t -static value is -4.17806, p
value is 0.006970, which is less than the t critical value 2.1318468 in one tail test, and p value is
0.0139401, which is less than the t critical value 2.776445 in two tail test. Hence it concludes
that there is a positive correlation between Wipro and Cognizant current ratio and there is no
significant difference between Wipro and Cognizant at 0.05 significant level of one and two tail
tests.
Current Ratio of Wipro and

Cognizant
Current
Ratio
Figure 4: Current Ratio of Wipro and Cognizant
c) Quick Ratio of Wipro and Cognizant
Table-3
Quick Ratio


2011-12 2.17 3.10
2012-13 1.74 3.17
2013-14 2.17 2.34
2014-15 2.27 2.79
2015-16 2.68 3.34
t-Test: Paired Two Sample for Means
Wipro Cognizant
Mean 2.206 2.948
Variance 0.11213 0.15517
Observations 5 5
Pearson Correlation 0.1680362
df 4
t Stat -3.513708
P(T<=t) one-tail 0.0122947
P(T<=t) two-tail 0.0245894
The above Table-3 revels that the Wipro quick ratio for the year 2012 was 2.17, whereas in the
years 2013 to 2016 the quick ratio has gradually increased from 1.74 to 2.68 which indicates that
the firm has satisfactory performance in comparison with the normal standard of 2:1. The
Cognizant current ratio for the year 2012 was 3.10 and it was gradually started increasing from
2.34 to 3.34. Hence it concludes that the quick ratio of Wipro and Cognizant is satisfactory in the
respective years.
The mean and variance values of quick ratios for Wipro and Cognizant were 2.206 and 2.948,
0.11213 and 0.15517.The Pearson correlation is 0.1680362, the t -static value is - 3.513708, p
value is 0.0122947 is less than the t critical value 2.1318468 in one tail test, and p value is
0.0245894, which is less than the t critical value 2.7764451 in two tail test. Hence it concludes

that there is a positive correlation between Wipro and Cognizant quick ratio and there is a
significant difference between Wipro and Cognizant at 0.05 significant levels of one and two tail
tests.
Quick Ratio of Wipro and Cognizant

Quick
Ratio
Figure 5: Quick Ratio of Wipro and Cognizant
d) Cash Ratio of Wipro and Cognizant

Table-4
Cash Ratio
2011-12 72.84 1.87
2012-13 72.85 2.11
2013-14 75.71 1.46
2014-15 66.67 1.82
2015-16 83.48 2.14
Wipro Cognizant
Mean 74.31 1.88
Variance 37.17775 0.07515
Observations 5 5
df 4

t Stat 26.886424
P(T<=t) one-tail 5.6880006
P(T<=t) two-tail 1.138E-05
The above Table-4 revels that the Wipro cash ratio for the year 2012 was 72.84, whereas in the
years 2013 to 2016 the cash ratio has fluctuating in between 72.84 to 83.48. The Cognizant cash
ratio for the years 2012 to 2016 was gradually increasing and decreasing from 1.87 to 2.14
respectively. Hence it concludes that the cash ratio of Wipro and Cognizant is satisfactory in the
respective years.
The mean and variance values of cash ratios for Wipro and Cognizant were 74.31 and 1.88,
37.17775 and 0.07515. The Pearson correlation is 0. 28918662, the t -static value is 26.886424,
p-value is 5.688 ,which is less than the t critical value 2.1318468 in one tail test, and p value is
1.138E-05,which is less than the t critical value 2.776445 in two tail test. Hence it concludes that
there is a positive correlation between Wipro and Cognizant cash ratio and there is no significant
difference between Wipro and Cognizant at 0.05 significant levels of one and two tail tests.
e) Earnings before Interest and Tax of Wipro and Cognizant

Table-5
EBIT
2011-12 20.59 13.88
2012-13 22.74 16.88
2013-14 25.75 19.24
2014-15 26.49 21.64
2015-16 24.63 23.57
Wipro Cognizant

Mean 24.04 19.042

Variance 5.7168 14.65302
Observations 5 5
df 4
t Stat 4.821634
The above Table-5 reveals that the Wipro Earnings before interest and Tax ratio for the year
2012 was 20.59, whereas in the years 2013 to 2016 the EBIT was fluctuating from 22.74 to
24.49. The Cognizant EBIT ratio for the year 2012 to 2016 was gradually increasing from 13.88
to 23.57 respectively. Hence it concludes that the EBIT of Wipro and Cognizant was satisfactory
in the respective years.
The mean and variance values of EBIT for Wipro and Cognizant were 24.04 and 19.042, 5.7168
and 14.65302. The Pearson correlation is 0.819303, the t -static value is 4.82134, p-value is
0.0042,which is less than the t critical value 2.131847 in one tail test, and p value 0.008513 is
less than the t critical value 2.776445 in two tail test. Hence it concludes that there is a positive
correlation between Wipro and Cognizant EBIT and there is significant difference between
Wipro and Cognizant at 0.05 significant levels of one and two tail tests.
f) Working Capital Turnover Ratio(WCTR) of Wipro and Cognizant

Table-6
WCTR

2011-12 0.45 0.14

2012-13 0.60 0.14
2013-14 0.89 0.16
2014-15 1.36 0.12
2015-16 1.32 0.10
Wipro Cognizant
Mean 0.924 0.132
Variance 0.16943 0.00052
Observations 5 5
df 4
t Stat 4.144723
The above Table-6 reveals that the Wipro Working Capital Turnover Ratio for the year 2012 was
0.45, whereas in the years from 2013 to 2016 it was increased from 0.60 to 1.32. The Cognizant
Working Capital Turnover Ratio for the years 2012 and 2013 was 0.40, for 2014 was 0.16, and
from 2015 to 2016 it was gradually decreased from 0.12 to 0.10. Hence it concludes that the
Working Capital Turnover Ratio of Wipro and Cognizant was varying in the respective years.
The mean and variance values of Working Capital Turnover Ratio for Wipro and Cognizant were
0.924 and 0.132, 0.16943 and 0.00052. The Pearson correlation is -0.67225, the t -static value is
4.144723, p-value is 0.0042, which is less than the t critical value 2.131847 in one tail test, and p

value is 0.014321, which is less than the t critical value 2.776445 in two tail test. Hence it
concludes that there is a positive correlation between Wipro and Cognizant Working Capital
Turnover Ratio and there is a significant difference between Wipro and Cognizant at 0.05
significant levels of one and two tail tests.
g) Return on Equity of Wipro and Cognizant
Table-7
ROE
2011-12 19.23 23.87
2012-13 23.31 22.36
2013-14 25.16 20.74
2014-15 23.66 19.08
2015-16 19.79 15.53

Wipro Cognizant
Mean 22.23 20.316
Variance 6.68745 10.35553
Observations 5 5
df 4
t Stat 1.080343

The above Table-7 revels that the Wipro Return on Equity Ratio for the years 2012 to 2014 was
19.23 to 25.16, whereas in the years 2015 to 2016 the return on equity ratio has decreased
to23.66 and 19.79. The Cognizant Return on Equity Ratio from the year 2012 to 2016 was 23.87
to 15.53 ,was gradually decreased in respective years. Hence it concludes that the Return on
Equity Ratio of Wipro was varying in respective years.
The mean and variance values of Return on Equity Ratio for Wipro and Cognizant were 22.23
and 20.316, 6.68745 and 10.35553. The Pearson correlation is 0.081058, the t -static value is
1.080343, p-value is 0.170389, which is less than the t critical value 2.131847 in one tail test,
and p value is 0.340777, which is less than the t critical value 2.776445 in two tail test. Hence it
concludes that there is a positive correlation between Wipro and Cognizant Return on Equity and
there is a significant difference between Wipro and Cognizant at 0.05 significant levels of one
and two tail tests.
h) Return on Capital Employed of Wipro and

Cognizant Table-
8
ROCE

2011-12 17.44 23.11
2012-13 22.98 21.71
2013-14 23.96 16.26
2014-15 22.73 15.79
2015-16 19.02 13.44

Wipro Cognizant

Mean 21.226 18.062

Variance 8.00338 17.14057
Observations 5 5
df 4
t Stat 1.279508
The above Table-8 reveals that the Wipro Return on Capital Employed for the year 2012 to 2014
was increased from 17.44 to 23.96, whereas in the years 2015 to 2016 the Return on Capital
Employed has decreased from 22.73 to 19.02. The Cognizant ROCE from the years 2012 to 2016
was reduced from 23.11 to 13.44. Hence it concludes that ROCE of Wipro was varying in the
respective years.
The mean and variance values of ROCE for Wipro and Cognizant were 21.226 and 18.062,
8.00338 and 17.14057. The Pearson correlation is -0.23182, the t -static value is 1.279508, p-
value is 0.134947, which is less than the t critical value 2.131847 in one tail test, and p value is
0.269895, which is less than the t critical value 2.776445 in two tail test. Hence it concludes that
there is a negative correlation between Wipro and Cognizant Return on Working Capital Ratio

and there is a significant difference between Wipro and Cognizant at 0.05 significant levels of
one and two tail tests.
4 FINDINGS
Performance of Liquidity and Profitability:
1. The firms don‟t have adequate funds for their day to day operations and hence could
maintain sufficient funds in the respective years.
2. The Current Ratio of Wipro and Cognizant is satisfactory in the respective years.
3. The Quick Ratio of Wipro and Cognizant is satisfactory in the respective years.
4. The Cash Ratio of Wipro and Cognizant is satisfactory in the respective years.
5. The EBIT of Wipro and Cognizant is satisfactory in the respective years.
6. The Working Capital Turnover Ratio of Wipro and Cognizant is varying in the respective
years.
7. The Return on Equity Ratio of Wipro is varying in respective years.
Correlation between Wipro and Cognizant:
1. There is a negative correlation between Wipro and Cognizant working capitals.

2. There is a positive correlation between Wipro and Cognizant current ratios.
3. There is a positive correlation between Wipro and Cognizant quick ratios.
4. There is a positive correlation between Wipro and Cognizant cash ratios.
5. There is a positive correlation between Wipro and Cognizant EBIT.
6. There is a positive correlation between Wipro and Cognizant Working Capital
Turnover Ratio.
7. There is a positive correlation between Wipro and Cognizant Return on Equity.

5 CONCLUSION
Referring to the objectives of the study the overall working capital performance of Wipro and
Cognizant is found to be satisfactory for the study period. The firms have shown significant
improvement in the performance in terms of liquidity and profitability aspects. There is a need
for improvement in some ratios related to debtors and working capital turnover in order to
enhance the liquidity and profitability position to the greater level over all working capital
performances of the firms.
REFERENCES
1. Abuzar M.A. Eljelly (2004). “Liquidity-Profitability tradeoff: an empirical investigation
in an emerging market”. International Journal of Commerce and Management, Vol. 14,
Issue. 2, ISSN: 1056-9219.
2. AmalenduBhunia, Islamuddin Khan and SomnathMuKhuti (2011). “A Study of
Managing Liquidity”, Journal of Management Research, Vol. 3, No. 2, ISSN 1941-
899X.Arnold, G. (2008). Corporate Financial Management.4th edit.Prentice Hall. Essex.
3. AzhagaiahRamachandran&MuralidharanJanakiraman (2009).“The relationship between
working capital management efficiency and EBIT”. Managing Global Transitions,
Volume 7, Number 1.
4. Berry, A. & Jarvis, R. (2006).Accounting in a Business Context.Fourth Edition. London,
UK:
5. Thomson.
6. Deloof M (2003). „Does working capital management affect profitability of Belgian
firms‟, Journal of Business Finance and Accounting, Vol 30, No. 3 &4, pp. 573-588.
7. Huynh Phuong Dong and Jyh-tay Su (2010). “The Relationship between Working Capital
Management and Profitability: A Vietnam Case”, International Research Journal of
Finance and Economics, Issue 49, ISSN 1450-2887,
I. Lazaridis and D. Tryfonidis (2006). “Relationship between Working Capital
Management and Profitability of Listed Companies in the Athens Stock
Exchange,” Journal of Financial Management and Analysis, vol. 18, no. 1, pp.
26-35.

8. KaushikChakraborty (2008). “Working Capital and Profitability: An Empirical Analysis

of Their Relationship with Reference to Selected Companies in the Indian
Pharmaceutical Industry”, The IUP Journal of Management Research, pp. 1-19.
9. L. Ganesamoorthy, R. Rajavathana (2013). “Effects of Working Capital Management on
Profitability of Select Automobile Companies in India”.International Journal of Scientific
Research, Vol. 2, Issue. 2, ISSN 2277 – 8179.
10. M. S. Nazir, and T. Afza (2009). “Working Capital Requirements and the Determining
Factors in Pakistan,” The IUP Journal of Applied Finance, vol.15, no. 4, pp. 28-38.
11. Rahaman, A. and Nasr, M. (2007).Working Capital Management and profitability: Case
of Pakistani firms. International Review of Business Research, 3(2), 275-296.
12. RiteshJayantibhai Patel and KalpeshPrajapati (2012). “A Comparative Study on Working
Capital Management of Selected Steel Companies of India”, Asian Journal of Research in
Business Economics and Management, Vol. 2, Issue. 7, ISSN: 2249‐7307.

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EFFECT OF WORKING CAPITAL ON THE PROFITABILITY WITH REFERENCE TO

Article · April 2018

The user has requested enhancement of the downloaded file.

EFFECT OF WORKING CAPITAL ON THE PROFITABILITY WITH

Bhavana Reddy Jaggavarapu1, Dr B.Kishore Babu2

JARDCS Special Issue On Engineering Technology 1453

identified as an accounting strategy which highlights on maintaining appropriate levels of both

Figure 1 :A classic working capital cycle (Source: Arnold, 2008:530)

1.1 Statement of the problem

JARDCS Special Issue On Engineering Technology 1454

2 REVIEW OF RELATED LITERATURES

JARDCS Special Issue On Engineering Technology 1455

JARDCS Special Issue On Engineering Technology 1456

Figure 2: Schematic Conceptual Framework

3.1 Source of the Data

JARDCS Special Issue On Engineering Technology 1457

Working Capital (WC) = Current Assets (CA) - Current Liabilities (CL)

3.2 Analysis and Interpretation

Working Capital (Cr.)

JARDCS Special Issue On Engineering Technology 1458

Hypothesized Mean Difference 0

Working capital Management

JARDCS Special Issue On Engineering Technology 1459

JARDCS Special Issue On Engineering Technology 1460

Figure 3: Working Capital Management

b) Current Ratio of Wipro and Cognizant

T-Test: Paired Two Sample for Means

JARDCS Special Issue On Engineering Technology 1461

Current Ratio of Wipro and

Figure 4: Current Ratio of Wipro and Cognizant

c) Quick Ratio of Wipro and Cognizant

JARDCS Special Issue On Engineering Technology 1462

Year Wipro Cognizant

JARDCS Special Issue On Engineering Technology 1463

JARDCS Special Issue On Engineering Technology 1464

Figure 5: Quick Ratio of Wipro and Cognizant

d) Cash Ratio of Wipro and Cognizant

JARDCS Special Issue On Engineering Technology 1465

e) Earnings before Interest and Tax of Wipro and Cognizant

JARDCS Special Issue On Engineering Technology 1466

Mean 24.04 19.042

f) Working Capital Turnover Ratio(WCTR) of Wipro and Cognizant

JARDCS Special Issue On Engineering Technology 1467

2011-12 0.45 0.14

JARDCS Special Issue On Engineering Technology 1468

Year Wipro Cognizant

2011-12 19.23 23.87

2012-13 23.31 22.36

2013-14 25.16 20.74

2014-15 23.66 19.08

2015-16 19.79 15.53

JARDCS Special Issue On Engineering Technology 1469

t Critical two-tail 2.776445

h) Return on Capital Employed of Wipro and

Year Wipro Cognizant

t-Test: Paired Two Sample for Means

JARDCS Special Issue On Engineering Technology 1470

Mean 21.226 18.062

t Critical two-tail 2.776445

JARDCS Special Issue On Engineering Technology 1471

7. The Return on Equity Ratio of Wipro is varying in respective years.

Correlation between Wipro and Cognizant: