Benchmarking: Working

Capital Efficiency
Agriculture and Food Industry of India
 1. Working Capital Efficiency
2. Industry Overview
3. Objective and Contribution of the study
OUTLINE 4. Methodology
5. Data Analysis
6. Discussion and Conclusions
Working Capital •

•
Concept

Wo r k i n g c a p i t a l c o m p o n e n t s

Efficiency • Leaders of the Industry

Working Capital Efficiency
All current assets and current liabilities are called Working Capital.
Total current assets are called Gross Working Capital.
Total current assets less total current liabilities is called Net Working Capital.
Components of Working Capital are cash and bank balance, accounts receivables and inventory on
asset side. Current liabilities consist of accounts payables, accrued wages and taxes.
Efficient management of working capital means maintaining optimum level of working capital to
balance liquidity and solvency in a firm.
This balance is created by managing different components of working capital. All industries are not
sensitive to same set of working capital components and to same extent. Thus efficiency of working
capital is defined differently in different industries.
How leaders are defined?
Profit Leaders: The companies whose five-year Net Profit Ratio is greater than
industry’s average.
Sales Leaders: The companies whose five-year Sales Growth Rate is greater than
the industry’s average.
Growth Leaders: The companies who fall in both categories i.e. companies who are
both Profit as well as Growth leaders.
  Agriculture is the primary source of
Agriculture And Food livelihood for about 58 percent of India’s
population (and 70% of rural household).
Product Industry in Gross Value Added by agriculture,
forestry and fishing is 16.50% in Indian
India economy in 2019-20. In 2014-15, it was
18.20%.
Global Standing
India is the largest producer of spices, pulses, milk, tea, cashew and jute; and the second largest
producer of wheat, rice, fruits and vegetables, sugarcane, cotton and oil seeds.
India is currently the world’s fourth largest producer of agro-chemicals.
India has the largest livestock population of around 512 million.
Favorable Conditions
India has the 10th largest arable land resources in the world. With 20 agro-climatic regions, all 15
major climates in the world exist in India. The country also possesses 46 of the 60 soil types in the
world.
Strategic geographic location and proximity to food importing nations favour India in terms of
exporting processed foods.
Dip in consumption expenditure
 Consumer spending expenditure decreased 2.6% in first quarter of 2020 than fourth quarter of
2019.
Record Production of Food Grains
 Government of India is targeting food grain production of 293.3 million tonnes, which 2% more
from record output achieved in current year.
Population Size: Agriculture and Food industry of India.
Sample Size: Top 100 companies of the Industry based on its net sales.
Sample Element: Yearly data of Working Capital and Net Profit was collected
during the period 2014 to 2019 was sample element of the study.
Tools used for Data Collection: Secondary data of WC and Net Profit is sourced
from Annual Financial Standalone details available on CMIE’s database; ProwessIQ.
GWC Total current asset.
NWC Total current asset less total current liabilities.
NWC/GWC Ability of a firm to meet its day-to-day operational activities.
C&B Liquidity
DIO The average time (in days) a company holds its inventory before selling it.

DRO The average time (in days) a company takes to collect payment after a sale has been made.

DPO The average time (in days) a company takes to pay its bills and invoices to its trade creditors.

OC The length of time between the purchase of inventory and the cash collected from the sale of the
inventory
NOC The length of time between paying for inventory and the cash collected from the sale of the
inventory
Sales Growth Ratio It is percentage change in net sales for the current year relative to net sales for preceding year.

Net Profit Ratio Profit After Tax divided by Net Sales.

 Tools Used For Data Analysis
Descriptive Analysis
●
To summarize data and
find patterns and deviation.
Correlation Analysis
●
To find degree and direction of ●
relation among all variables.
Regression Analysis
To find relation between two
variables.
 • Descriptive Analysis

Data Analysis •

•
Correlation Analysis

Regression Analysis
 GWC
180000

160000
Outlier

140000

120000

100000

80000

60000

40000

20000

0
0 20 40 60 80 100 120
 GWC
120000

100000

80000

60000

40000

20000

0
0 20 40 60 80 100 120
Statistics

GWC NWC NWC/G C&B DIO DRO DPO OC NOC

  WC

Valid 100 100 100 100 100 100 100 100 100
N
Missing 0 0 0 0 0 0 0 0 0
Median 2169 206 15% 131 84 33 45 146 86
Std. Deviation 17593 9250 55% 6061 97 41 51 114 96
Minimum 142 -8781 -228% 3 13 0 4 16 -95
Maximum 159207 86006 78% 51595 561 237 330 694 498

Due to presence of outlier and high standard deviation; median is used as measure of central location
in this sample.
Statistics

GWC NWC NWC/G C&B DIO DRO DPO OC NOC

  WC

Valid 100 100 100 100 100 100 100 100 100
N
Missing 0 0 0 0 0 0 0 0 0
Median 9463 1032 2.75% 1308 57 88 71 146 75
Std. Deviation 16340 6037 104.54% 2772 50 101 64 103 73
Minimum 22 -39491 -721.77% 0 0 0 0 16 -80
Maximum 108811 23852 98.80% 15867 182 656 388 678 302

Due to presence of outlier and high standard deviation; median is used as measure of central location
in this sample.
 Profit Leaders
2.5
143.94-243.94 343.94-443.94
443.94-543.94 543.94-643.94
643.94-743.94 743.94-843.94
843.94-943.94 1043.94-1143.94
2 1243.94-1343.94 1543.94-1643.94
1643.94-1743.94 1743.94-1843.94
1943.94-2043.94 2043.94-2143.94
2143.94-2243.94 2343.94-2443.94
2543.94-2643.94 2643.94-2743.94
1.5 2943.94-3043.94 3443.94-3543.94
3643.94-3743.94 5143.94-5243.94
5343.94-5443.94 5943.94-6043.94
6743.94-6843.94 7543.94-7643.94
7643.94-7743.94 8443.94-8543.94
1 10243.94-10343.94 10343.94-10443.94
1
10843.94-10943.94 11143.94-11243.94
12443.94-12543.94 12643.94-12743.94
14543.94-14643.94 20043.94-20143.94
21643.94-21743.94 23943.94-24043.94
0.5 25543.94-25643.94 40643.94-40743.94
159143.94-159243.94

0
Above Average Below Average (blank)
 Sales Leaders
4.5

141.58-241.58 341.58-441.58
4
441.58-541.58 541.58-641.58
641.58-741.58 741.58-841.58
3.5 941.58-1041.58 1041.58-1141.58
1241.58-1341.58 1341.58-1441.58
1441.58-1541.58 1541.58-1641.58
3 1641.58-1741.58 2041.58-2141.58
2141.58-2241.58 2241.58-2341.58
2541.58-2641.58 2841.58-2941.58
2.5 2941.58-3041.58 3441.58-3541.58
3641.58-3741.58 3841.58-3941.58
4141.58-4241.58 5341.58-5441.58
2 6741.58-6841.58 7441.58-7541.58
7541.58-7641.58 8441.58-8541.58
10241.58-10341.58 10841.58-10941.58
1.5
11141.58-11241.58 14541.58-14641.58
16941.58-17041.58 21641.58-21741.58
1 23941.58-24041.58 25641.58-25741.58
1 159141.58-159241.58

0.5

0
Above Average Below Average
 Growth leaders
7

6
352.42-852.42
852.42-1352.42
1352.42-1852.42
5
1852.42-2352.42
2352.42-2852.42
3352.42-3852.42
4 5352.42-5852.42
8352.42-8852.42
9852.42-10352.42
10852.42-11352.42
3
14352.42-14852.42
21352.42-21852.42
23852.42-24352.42
2 25352.42-25852.42

1
1

0
Above Average Below Average
 GROWTH LEADER
1.2

0.8
8078
13350
15506
0.6 18008
53335
55387
0.4 108811

0.2

0
ABOVE AVERAGE BELOW AVERAGE
 SALES LEADER
1.2

5385
0.8 8078
8107
13350
15506
18008
0.6 31717
33038
38017
38544
0.4 53335
55387
108811

0.2

0
ABOVE AVERAGE BELOW AVERAGE
 PROFIT LEADER
1.2

3660
8078
0.8 9388
13237
13350
0.6 15506
18008
35461
47811
0.4 53335
55387
108811
0.2

0
ABOVE AVERAGE BELOW AVERAGE
Regression Analysis
Model Summaryb
R Adjusted Std. Error Change Statistics
Model R Square R Square of the R Square F Chang df1 df2 Sig. F
Estimate Change e Change
1 .835a .697 .648 137.914% .697 14.426 7 44 .000
a. Predictors: (Constant), NOC, C&B, DPO, DRO, NWC/GWC, GWC, NWC
b. Dependent Variable: Avg_S_G

 Avg_S_G= f (DIO, DPO, DRO, GWC, NWC, NWC/GWC, C&B, OC, NOC)
 Avg_S_G = β0 + β1 DIO + β2 DPO + β3 DRO + β4 GWC + β5 NWC + β6 (NWC/GWC) + β7 (C&B) + β8 OC

+ β9 NOC

H0: β1 = β2 = β3 = β4 = β5 = β6 = β7 = β8 = β9 = 0 (Null Hypothesis Rejected)

 Regression Analysis

Model Summary

Change Statistics
Adjusted R Std. Error of R Square
Model R R Square Square the Estimate Change F Change df1 df2 Sig. F Change
1 .610a .372 .283 6.63046% .372 4.151 3 21 .019

a. Predictors: (Constant), NOC, DIO, DPO

 Avg_S_G= f (DIO, DPO, DRO, GWC, NWC, NWC/GWC, C&B, OC, NOC)
 Avg_S_G = β0 + β1 DIO + β2 DPO + β3 DRO + β4 GWC + β5 NWC + β6 (NWC/GWC)

+ β7 (C&B) + β8 OC + β9 NOCH0: β1 = β2 = β3 = β4 = β5 = β6 = β7 = β8 = β9 = 0 (Null

Hypothesis Rejected)
 Correlations

GWC NWC NWC/ C&B DIO DRO DPO OC NOC Avg_ Avg_
  GWC S_G NPM

Pearson -.053 .134 .233 .778** -.138 -.162 .062 -.184 -.203 -.272 1
Correlation
Avg_NPM Sig. (2-
tailed) .801 .524 .263 .000 .512 .438 .767 .379 .331 .188  
N 25 25 25 25 25 25 25 25 25 25 25
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).
 Coefficientsa

Unstandardized Coefficients Standardized

Model Coefficients t Sig.
B Std. Error Beta
(Constant) -66.313 33.148   -2.001 .052
GWC .004 .005 .353 .791 .433
NWC .000 .014 -.019 -.025 .980
1. NWC/GWC -.317 .574 -.078 -.553 .583
C&B -.011 .019 -.333 -.578 .567
DRO -.141 .547 -.027 -.259 .797
DPO 3.365 .533 .751 6.309 .000
NOC -.700 .281 -.321 -2.493 .017
Dependent Variable: Avg_S_G
Discussion and  B e n c h m a rk in g Wo rk in g C ap ita l
S t ru c t u re .

Conclusions  I nte rp retati o n s .

 Operating Cycle

(in days) Profit Leaders Sales Leaders Growth Leaders

DIO 120 107 99

DRO 44 39 40

DPO 56 56 47

OC 163 146 140

NOC 107 89 92
 Source Of Financing

Profit Leaders Sales Leaders Growth Leaders

Long Term (NWC/GWC) 9% 1% 3%

Short Term 91% 99% 97%

 Current Assets Policy

Profit Leaders Sales Leaders Growth Leaders

CA/NS 48% 43% 45%

Current Assets Policy Moderate Moderate Moderate

 Cash Policy

Profit Leaders Sales Leaders Growth Leaders

Cash Policy 13% 10% 14%

 Operating Cycle

(in days) Profit Leaders Sales Leaders Growth Leaders

DIO 49 59 66

DRO 53 41 43

DPO 59 68 77

OC 101 100 109

NOC 42 31 32
 Source Of Financing

Profit Leaders Sales Leaders Growth Leaders

Long Term (NWC/GWC) -50% -2% 8%

Short Term 150% 102% 92%

 Current Assets Policy

Profit Leaders Sales Leaders Growth Leaders

CA/NS 37% 31% 39%

Current Assets Policy Moderate Aggressive Moderate

 Working Capital Financing Policy

Year Long term sources Short term sources

2015 7% 93%

2016 5% 95%

2017 9% 91%

2018 11% 89%

2019 -18% 118%

5 year average 3% 97%

 Cash Policy

Profit Leaders Sales Leaders Growth Leaders

Cash Policy 7% 5% 8%
The study finds out 35 Profit leaders, 35 Sales leaders and 20 Growth leaders out of sample.
It is found that efficiency of working capital management effects Benchmarking measures such as
NPM and Growth Rate.
In correlation analysis it is found that among all growth leaders, only Cash and Bank balance had
significant positive relation with net profit ratio. Sales growth could not establish any significant
correlation with any of the variables.
Out of 25 companies in the list of growth leader, 20 has maintained higher cash and bank balance
than industry average which is 131 Million in Indian Rupees.
As a Net Profit Ratio could not be established in any regression model to relate with working capital
components.
In regression analysis, taking growth rate as dependent variable it was found that DPO and NOC is
closely related to dependent variable, contributing to high dependability.
The study finds out 14 Profit leaders, 13 Sales leaders and 10 Growth leaders out of the sample.

The present study through the descriptive analysis showed very high standard deviation in variables of working capital. It
was found that efficiency of working capital management affects Benchmarking measures.

 In Pearson correlation analysis, significant positive correlation of Return on Asset with NWC, NWC/GWC, NPM, Sales
growth and negative correlation with DRO and DE Ratio @1% significance and at @5% significance a positive strong
correlation with Size and a negative strong correlation with DPO. Though some of the variables which were used as
independent variables in regression, are found to be significantly correlated. These variables are DIO, DRO, NOC and sales
growth.

 In regression analysis, taking Return on Asset (ROA) as dependent variable, it was found that Sales growth is closely related
to dependent variable, contributing to high dependability.

 In case of ANOVA, the p-value in both the models is below the alpha value i.e. 0.05. Hence, both the model are significant.
Thank You!
WHOLESALE 1. Wholesale and retail industry is an
important pillar in Indian Economy and

AND RETAIL
account for about 10 percent of its GDP and
expected to grow 25% by 2025 and
estimated to be US$ 60 billion by 2020 with

INDUSTRY IN the top five in the world by economic value.

2. It generate employment to about 3.3% and

INDIA can sale any types of goods include

repairing and resale.
 INTRODUCTION
Indian retail one of the fastest growing market in the world due to economic growth.
It projected to grow from an estimated US$672 billion in 2017 to US$1200 billion in 2021F.
Total consumption expenditure is expected to reach nearly US$ 3600 billion by 2020 from US$1824
billion in 2017.
FMCG market expected to increase US$ 103.7 billion by 2020 from Rs3.4 Lakh crore in FY2018.
Participation from foreign and private players to boost retail infrastructure.
GST came as a single unified tax system foe the sector and about 51% FDI is allowed in multi-branded
retail.
Indian retail would add more than 39 million square feet of space by 2022.
Projected that by 2021, traditional hold 75%, organised retail will reach 18%, and E-commerce retail
share will reach 7% of total market share.
  To benchmark Working Capital
Structure of most efficient
companies in Agriculture and
Food Industry of India.
 To fi n d P ro fi t le a d e rs , S a le s
Objective and le ad e rs a n d Grow th l ea d e rs .
 To fi n d Wo rk i n g C a p ita l
Contribution of the co m p o n e nt t h at eff e c t s i ts
effi c ie n c y
Study  Contributi on
 I n d u st r y
 L ite rat u re
 • S am p le De s i gn
Methodology • Re s e arc h M o d e l
SAMPLE DESIGN

Population Size: wholesale and Retail Industry in India.

Sample Size: Top 100 companies of the Industry based on its net
sales.
Sample Element: Yearly data of Working Capital and Net Profit
was collected during the period 2014 to 2019 was sample element
of the study.
Tools used for Data Collection: Secondary data of WC and Net
Profit is sourced from Annual Financial Standalone details
available on CMIE’s database; ProwessIQ.
 Tools Used For Data Analysis

Descriptive Analysis Correlation Analysis Regression Analysis

●
To summarize data and find ●
To find degree and direction of ●
To find relation between two
patterns and deviation. relation among all variables. variables.
 DESCRIPTIVE STATISTICS
Variables Mean Std.Deviation Min. Max. Skewness Kurtosis Count
9463.5 16340.0 22.2 108811.4 3.3 14.0 100
GWC
1032.0 6037.3 -39491.3 23852.2 -2.2 22.3 100
NWC
0.0 0.8 -5.1 1.0 -3.9 21.2 100
NWC/GWC
1308.4 2772.5 0.2 15866.9 3.4 13.2 100
C&B
57.5 49.8 0.0 182.5 0.9 -0.2 100
DIO
88.2 100.6 0.2 656.4 3.4 14.6 100
DRO
71.1 63.9 0.0 388.0 2.5 8.2 100
DPO
145.7 103.3 15.7 678.3 2.4 8.4 100
OC
74.6 72.8 -79.6 302.2 1.0 1.2 100
NOC
 CORRELATION ANALYSIS

NWC/ Sales_
  GWC NWC GWC C&B DIO DRO DPO OC NOC NPM ROA DE ratio Size growth ROE
ROA Pearso -0.062 0.050 0.157 0.091 0.122 -.333 **
-.214 *
-.265** -0.189 0.164 1 -.203* 0.037 0.023 0.026
n Cor.

Sig. (2- 0.538 0.622 0.119 0.366 0.227 0.001 0.033 0.008 0.060 0.103   0.043 0.718 0.822 0.797
tailed)
 Model Summary REGRESSION ANALYSIS
Model R R Square Adjusted R Square Std. Error of the Estimate
.380a 0.144 0.089 0.063665712372067
1
.275a 0.076 0.037 0.065470172697335
2
a. Predictors: (Constant), Sales growth, NOC, Size, DE ratio

b. Predictors: (Constant), Sales growth, NOC, Size, DE ratio, DPO, DIO

1. Return on Asset = f (NOC, DE Ratio, Size, Sales growth)

Return on Asset = β0 + β1 NOC + β2 DE Ratio + β3 Size + β4 Sales growth

2. Return on Asset = f (DIO, DPO, DRO, DE Ratio, Size, Sales growth)

Return on Asset= β0 + β1 DIO + β2 DPO + β3 DRO + β4 DE Ratio + β5 Size + β6 Sales growth

H0: β1 = β2 = β3 = β4 = 0
H1: β1 = β2 = β3 = β4 = β5 = β6 = 0
 Coefficientsa
Unstandardized Coefficients Standardized
Model Coefficients t Sig.
B Std. Error Beta
(Constant) 0.073 0.045   1.649 0.103
NOC 0.000 0.000 -0.243 -2.491 0.015
1. DE Ratio -0.004 0.001 -0.931 -4.754 0.000
Size 0.003 0.006 0.076 0.552 0.582
Sales Growth -0.003 0.003 -0.060 -0.790 0.432

2. (Constant)
-0.425 0.135   -3.143 0.002

NOC
-9.603E-07 0.000 0.000 -0.003 0.997

DE ratio
0.028 0.001 0.854 20.969 0.000

Size
0.039 0.018 0.134 2.174 0.033

Sales growth
0.011 0.011 0.035 0.989 0.326

DIO
0.000 0.000 -0.024 -0.577 0.566

DPO
0.000 0.000 0.036 0.942 0.349
a. Dependent Variable: ROA
 ANOVA
Sum of

Model Squares df Mean Square F Sig.

Regression
0.250 16 0.016 6.779 .000b
1. 0.191 83 0.002    
Residual

Total
0.440 99      

Regression
18.702 16 1.169 50.712 .000b
2.
Residual
1.913 83 0.023    

Total
20.615 99      

a. Dependent Variable: ROA

b. Predictors: (Constant), Sales growth, NOC, Size, DE ratio

c. Predictors: (Constant), Sales growth, NOC, Size, DE ratio, DPO, DIO

Discussion and  B e n c h m a rk in g Wo rk in g C ap ita l
S t ru c t u re .

Conclusions  I nte rp retati o n s .

 Operating Cycle

(in days) Profit Leaders Sales Leaders Growth Leaders

DIO 49 59 66

DRO 53 41 43

DPO 59 68 77

OC 101 100 109

NOC 42 31 32
 Source Of Financing

Profit Leaders Sales Leaders Growth Leaders

Long Term (NWC/GWC) -50% -2% 8%

Short Term 150% 102% 92%

 Current Assets Policy

Profit Leaders Sales Leaders Growth Leaders

CA/NS 37% 31% 39%

Current Assets Policy Moderate Aggressive Moderate

 Working Capital Financing Policy

Year Long term sources Short term sources

2015 7% 93%

2016 5% 95%

2017 9% 91%

2018 11% 89%

2019 -18% 118%

5 year average 3% 97%

 Cash Policy

Profit Leaders Sales Leaders Growth Leaders

Cash Policy 7% 5% 8%
WHOLESALE 1. Wholesale and retail industry is an
important pillar in Indian Economy and

AND RETAIL
account for about 10 percent of its GDP and
expected to grow 25% by 2025 and
estimated to be US$ 60 billion by 2020 with

INDUSTRY IN the top five in the world by economic value.

2. It generate employment to about 3.3% and

INDIA can sale any types of goods include

repairing and resale.
 INTRODUCTION
Indian retail one of the fastest growing market in the world due to economic growth.
It projected to grow from an estimated US$672 billion in 2017 to US$1200 billion in 2021F.
Total consumption expenditure is expected to reach nearly US$ 3600 billion by 2020 from US$1824
billion in 2017.
FMCG market expected to increase US$ 103.7 billion by 2020 from Rs3.4 Lakh crore in FY2018.
Participation from foreign and private players to boost retail infrastructure.
GST came as a single unified tax system foe the sector and about 51% FDI is allowed in multi-branded
retail.
Indian retail would add more than 39 million square feet of space by 2022.
Projected that by 2021, traditional hold 75%, organised retail will reach 18%, and E-commerce retail
share will reach 7% of total market share.
  To benchmark Working Capital
Structure of most efficient
companies in Agriculture and
Food Industry of India.
 To fi n d P ro fi t le a d e rs , S a le s
Objective and le ad e rs a n d Grow th l ea d e rs .
 To fi n d Wo rk i n g C a p ita l
Contribution of the co m p o n e nt t h at eff e c t s i ts
effi c ie n c y
Study  Contributi on
 I n d u st r y
 L ite rat u re
 • S am p le De s i gn
Methodology • Re s e arc h M o d e l
SAMPLE DESIGN

Population Size: wholesale and Retail Industry in India.

Sample Size: Top 100 companies of the Industry based on its net
sales.
Sample Element: Yearly data of Working Capital and Net Profit
was collected during the period 2014 to 2019 was sample element
of the study.
Tools used for Data Collection: Secondary data of WC and Net
Profit is sourced from Annual Financial Standalone details
available on CMIE’s database; ProwessIQ.
Tools Used For Data Analysis

Descriptive Analysis Correlation Analysis Regression Analysis

•To summarize data and •To find degree and •To find relation between two
find patterns and deviation. direction of relation among variables.
all variables.
 DESCRIPTIVE STATISTICS
Variables Mean Std.Deviation Min. Max. Skewness Kurtosis Count
9463.5 16340.0 22.2 108811.4 3.3 14.0 100
GWC
1032.0 6037.3 -39491.3 23852.2 -2.2 22.3 100
NWC
0.0 0.8 -5.1 1.0 -3.9 21.2 100
NWC/GWC
1308.4 2772.5 0.2 15866.9 3.4 13.2 100
C&B
57.5 49.8 0.0 182.5 0.9 -0.2 100
DIO
88.2 100.6 0.2 656.4 3.4 14.6 100
DRO
71.1 63.9 0.0 388.0 2.5 8.2 100
DPO
145.7 103.3 15.7 678.3 2.4 8.4 100
OC
74.6 72.8 -79.6 302.2 1.0 1.2 100
NOC
 CORRELATION ANALYSIS

NWC/ Sales_
  GWC NWC GWC C&B DIO DRO DPO OC NOC NPM ROA DE ratio Size growth ROE
ROA Pearso -0.062 0.050 0.157 0.091 0.122 -.333 **
-.214 *
-.265** -0.189 0.164 1 -.203* 0.037 0.023 0.026
n Cor.

Sig. (2- 0.538 0.622 0.119 0.366 0.227 0.001 0.033 0.008 0.060 0.103   0.043 0.718 0.822 0.797
tailed)
 Model Summary REGRESSION ANALYSIS
Model R R Square Adjusted R Square Std. Error of the Estimate
.380a 0.144 0.089 0.063665712372067
1
.275a 0.076 0.037 0.065470172697335
2
a. Predictors: (Constant), Sales growth, NOC, Size, DE ratio

b. Predictors: (Constant), Sales growth, NOC, Size, DE ratio, DPO, DIO

1. Return on Asset = f (NOC, DE Ratio, Size, Sales growth)

Return on Asset = β0 + β1 NOC + β2 DE Ratio + β3 Size + β4 Sales growth

2. Return on Asset = f (DIO, DPO, DRO, DE Ratio, Size, Sales growth)

Return on Asset= β0 + β1 DIO + β2 DPO + β3 DRO + β4 DE Ratio + β5 Size + β6 Sales growth

H0: β1 = β2 = β3 = β4 = 0
H1: β1 = β2 = β3 = β4 = β5 = β6 = 0
 Coefficientsa
Unstandardized Coefficients Standardized
Model Coefficients t Sig.
B Std. Error Beta
(Constant) 0.073 0.045   1.649 0.103
NOC 0.000 0.000 -0.243 -2.491 0.015
1. DE Ratio -0.004 0.001 -0.931 -4.754 0.000
Size 0.003 0.006 0.076 0.552 0.582
Sales Growth -0.003 0.003 -0.060 -0.790 0.432

2. (Constant)
-0.425 0.135   -3.143 0.002

NOC
-9.603E-07 0.000 0.000 -0.003 0.997

DE ratio
0.028 0.001 0.854 20.969 0.000

Size
0.039 0.018 0.134 2.174 0.033

Sales growth
0.011 0.011 0.035 0.989 0.326

DIO
0.000 0.000 -0.024 -0.577 0.566

DPO
0.000 0.000 0.036 0.942 0.349
a. Dependent Variable: ROA
 ANOVA
Sum of

Model Squares df Mean Square F Sig.

Regression
0.250 16 0.016 6.779 .000b
1. 0.191 83 0.002    
Residual

Total
0.440 99      

Regression
18.702 16 1.169 50.712 .000b
2.
Residual
1.913 83 0.023    

Total
20.615 99      

a. Dependent Variable: ROA

b. Predictors: (Constant), Sales growth, NOC, Size, DE ratio

c. Predictors: (Constant), Sales growth, NOC, Size, DE ratio, DPO, DIO

Discussion and  B e n c h m a rk in g Wo rk in g C ap ita l
S t ru c t u re .

Conclusions  I nte rp retati o n s .

 Operating Cycle

(in days) Profit Leaders Sales Leaders Growth Leaders

DIO 49 59 66

DRO 53 41 43

DPO 59 68 77

OC 101 100 109

NOC 42 31 32
 Source Of Financing

Profit Leaders Sales Leaders Growth Leaders

Long Term (NWC/GWC) -50% -2% 8%

Short Term 150% 102% 92%

 Current Assets Policy

Profit Leaders Sales Leaders Growth Leaders

CA/NS 37% 31% 39%

Current Assets Policy Moderate Aggressive Moderate

 Working Capital Financing Policy

Year Long term sources Short term sources

2015 7% 93%

2016 5% 95%

2017 9% 91%

2018 11% 89%

2019 -18% 118%

5 year average 3% 97%

 Cash Policy

Profit Leaders Sales Leaders Growth Leaders

Cash Policy 7% 5% 8%
 FINDINGS
The study finds out 12 Profit leaders, 13 Sales leaders and 7 Growth leaders out of sample.
Pearson Correlation Analysis and P value in correlation shows the significance. At 1% significance
level Return on Asset has positive relation with NWC, NWC/GWC, NPM, Sales growth and
negative relation with DRO and OC. At 5% significance level it shows positive relationship with
DE ration and negative relation with DRO.
In descriptive analysis, with the wide variability in standard deviation value from 63 to 16340
shows it affects company Benchmark through working capital management.
In regression NOC and Size is closely related with ROA with the value 0.015 and 0.033 which
contributing high dependability.
P value in ANOVA of both the model taken ROA as dependent variable shows significant relationship with the
value .000.
In terms of Source of Finance, Profit Leader has comparatively better than the growth and sales leader.
 FINDINGS
The study finds out 12 Profit leaders, 13 Sales leaders and 7 Growth leaders out of sample.
Pearson Correlation Analysis and P value in correlation shows the significance. At 1% significance
level Return on Asset has positive relation with NWC, NWC/GWC, NPM, Sales growth and
negative relation with DRO and OC. At 5% significance level it shows positive relationship with
DE ration and negative relation with DRO.
In descriptive analysis, with the wide variability in standard deviation value from 63 to 16340
shows it affects company Benchmark through working capital management.
In regression NOC and Size is closely related with ROA with the value 0.015 and 0.033 which
contributing high dependability.
P value in ANOVA of both the model taken ROA as dependent variable shows significant relationship with the
value .000.
In terms of Source of Finance, Profit Leader has comparatively better than the growth and sales leader.