A STUDY ON THE EFFECTIVENESS OF WORKING CAPITAL MANAGEMENT IN THE INDIAN FOOTWEAR INDUSTRY

Abstract

Working capital management is a fundamental aspect of corporate financial management that significantly influences a firm’s liquidity, profitability, and overall financial health. In manufacturing industries, particularly the footwear sector, efficient working capital management is essential for maintaining operational continuity and achieving sustainable growth. The Indian footwear industry is one of the largest footwear manufacturing sectors globally, contributing substantially to employment generation, exports, and economic development. However, the industry faces numerous challenges, including fluctuating demand, rising raw material costs, inventory management complexities, and intense market competition. This research paper examines the effectiveness of working capital management practices in the Indian footwear industry and their impact on financial performance. The study explores key working capital components such as inventory management, cash management, accounts receivable management, and accounts payable management. Using secondary data and existing literature, the paper evaluates the relationship between working capital efficiency and profitability. The findings reveal that effective working capital management improves liquidity, reduces financial risk, enhances profitability, and strengthens competitive advantage. The study concludes with recommendations for improving working capital efficiency within the footwear sector.