Annals of R.S.C.B., ISSN:1583-6258, Vol. 25, Issue 6, 2021, Pages.

3174 - 3181
Received 25 April 2021; Accepted 08 May 2021.

Working Capital Mangement of Wipro Limited

1
DR.M.YASODHA, 2VAIJAYANTTHI.R, 3SHREE HARSHINI.G, 4NIVETHA.V
1
Assistant Professor, B.Com Professional Accounting,
PSGR Krishnammal College for Women, Coimbatore, Tamil Nadu, India
2
Student, B.Com Professional Accounting,
PSGR Krishnammal College for Women, Coimbatore, Tamil Nadu, India
3
Student, B.Com Professional Accounting,
PSGR Krishnammal College for Women, Coimbatore, Tamil Nadu, India
4
Student, B.Com Professional Accounting,
PSGR Krishnammal College for Women, Coimbatore, Tamil Nadu, India

ABSTRACT
The management of capital is one of the most important areas of management in a firm. Working capital plays a
vital role on day to day expenses. Capital management is a neighborhood which emphasizes on the productive
utilization available funds created out of excellent financial solvency, cash flows and growth strategies in a
company. The working capital is also known as short term capital or circulating capital. It is required for investing in
short term assets like bank, cash, receivables and inventory. Working capital is the difference between current assets
and current liabilities. When the current assets of the company are more than the current liabilities it indicates that
the position of the company from the point of working capital is sound and satisfactory.

KEYWORDS : working capital management, wipro limited.

INTRODUCTION

The capital requirement refers to the funds that a company requires to achieve its goals. Generally, it is categorized
into two types, Fixed capital and working capital. Fixed capital is a part of total capital of a business which is
invested in physical assets such as vehicles, factories or machinery that is relatively permanent for more than one
accounting period. Working capital is a part of total capital which can be used for day to day operations. It is the
amount of cash a business can safely spend. A good working capital management determines the growth,
profitability and liquidity of the company.

STATEMENT OF PROBLEM

Working capital management of a firm is important for the following two reasons. An optimum part of the
investment is invested in firm current assets,the level of current assets will change quickly with the variation in sales
and the working capital management of a firm will have a greater impact on the firm’s profitability. Hence, this
study has been conducted to know the effect of the size and rising of working capital and also to analyse the
effectiveness of inventory, cash, receivables management.

OBJECTIVES OF THE STUDY

1. To study the working capital management of Wipro ltd

http://annalsofrscb.ro 3174
Annals of R.S.C.B., ISSN:1583-6258, Vol. 25, Issue 6, 2021, Pages. 3174 - 3181
Received 25 April 2021; Accepted 08 May 2021.

2. To analyse the receivable management, inventory management of Wipro limited.

3. To check the liquidity of the company
SCOPE OF THE STUDY
Generally working capital management refers to the management of current assets and current liabilities and also the
relationship between them. The study enhances the idea about the performance of working capital of the company.
The higher profitability and proper liquidity of a firm is certified by a sound working capital. The study of working
capital helps to identify the areas that are to be improved. It magnifies the liquidity, solvency, credit worthiness and
reputation of the enterprise.

RESEARCH METHODOLOGY

A research methodology is the framework for the study. This methodology includes collection of secondary data.
Data related to profit and loss account, balance sheet and other information is collected from various websites,
journals and books.

TOOLS

Ratio analysis is used in the various aspects in the project.

LIMITATIONS OF THE STUDY

Since the study is based on secondary data, the direct examination of figures is inappropriate. The study is also
limited to a period of 5 years. The data is collected for the period 2016-2020.

REVIEW OF LITERATURE

B.Uma Maheswari and Professor.B.Ramachandra Reddy (2012) stated that Every firm needs working capital
irrespective of their nature. Manufacturing organizations require much working capital than the trading organization.
Efficient management of working capital is important for the success of enterprise, whereas inefficient management
of working capital may cause various problems such as reduction of liquidity position, loosing of profits and utility
that leads to winding of the company. Therefore, adequate working capital is required for uninterruption of
organization activities.

G.L.Meena and I. Lokanandha Reddy (2016) undertook the study to achieve 3 main objectives. These objectives
were met by using a mixed research method by collecting both quantitative and qualitative data. The research
revealed that when profitability deteriorates, low cash is generated from the operations and firms are able to survive
by postponing the payment to suppliers. The regression analysis results indicate the negative relation with the cash
conversion cycle to ROTA, which means that management of the firm can increase profitability by decreasing cash
conversion cycle period.

http://annalsofrscb.ro 3175
Annals of R.S.C.B., ISSN:1583-6258, Vol. 25, Issue 6, 2021, Pages. 3174 - 3181
Received 25 April 2021; Accepted 08 May 2021.

Mr.V.Venkatachalam (2016), the researcher conducted a study on “Working Capital Management on Mahindra and
Mahindra Private Limited”. The main objective of the study is to analyze whether the companies are viable in the
long run through ratio analysis and statement of changes in working capital. He concluded that the overall working
stability-soundness of the company has improved over the years very well.

Akash B. Selkari and Omdeo Ghyar (2016) conducted a “Study on Working capital of Mahindra and Mahindra Ltd”
for a period of 3 years from 2015-18. To study the working capital of the company ratio analysis technique was
used. They came to an end that the working capital of the company was satisfactory because of maintaining proper
inventory levels, cash, and other current assets and a decrease in the current liabilities and provisions.

Dr.V. Bhuvaneswari (2020) highlighted the working capital which will determine whether the position of the
company from the working capital point of view is sound and satisfactory. She concluded that the overall working
stability, soundness and overall financial performance have improved over the years.

ANALYSIS AND INTERPRETATION:

STATEMENT OF CHANGES IN GROSS WORKING CAPITAL:
Gross working capital refers to the firm’s investment in current assets. Current assets are the assets which can be
converted into cash within an accounting year and include cash, short term securities, debtors, and stock
TABLE 1 REFERS TO THE GROSS WORKING CAPITAL
(Amount in
Crores)
PARTICULARS 2016 2017 2018 2019 2020

Current Assets

Investments 20,419.50 29,146.70 29,146.70 21,998.80 21,998.80

Inventories 526.20 355.90 294.30 340.30 174.10

Trade Receivables 8398.00 8129.90 9502.00 10648.60 9257.00

cash and cash 8408.80 3156.60 2322.00 10390.20 10444.00

equivalent
short term loans 0.00 191.70 0.00 0.00 947.20
and advances
other current 7508.80 7386.30 6007.80 4352.50 5927.50
assets
Total current 45260.30 48727.10 47272.80 47730.40 45713.30
assets

In 2017 there was an increase in the working capital of Rs.3466.80 Crores because of the increase in investment and
in 2018 there was decrease in working capital by Rs.1454.30 Crores because of decrease in some current assets. In

http://annalsofrscb.ro 3176
Annals of R.S.C.B., ISSN:1583-6258, Vol. 25, Issue 6, 2021, Pages. 3174 - 3181
Received 25 April 2021; Accepted 08 May 2021.

2019 there was an increase in working capital by Rs.457.6 Crores as there was both increase and decrease in current
assets and in 2020 there was a decrease in 2017.10 Crores.

STATEMENT OF CHANGES IN NET WORKING CAPITAL:

Net Working Capital refers to the difference between current assets and current liabilities. Current liabilities those
claims of outsiders which are expected to mature for payment within an accounting year and include creditor, bills
payables, and outstanding expenses. Net working capital can be positive or negative. A positive net working capital
will arise when current assets exceed current liabilities. Negative net working capital occurs when current liabilities
are in excess of current assets.

TABLE 2: THE TABLE REFERS TO NET WORKING CAPITAL

(Amount in
Crores)
2016 2017 2018 2019 2020
PARTICULARS
Current Assets

Investments 20,419.50 29,146.70 29,146.70 21,998.80 21,998.80

Inventories 526.20 355.90 294.30 340.30 174.10

Trade 8398.00 8129.90 9502.00 10648.60 9257.00

Receivables
cash and cash 8408.80 3156.60 2322.00 10390.20 10444.00
equivalent
short term loans 0.00 191.70 0.00 0.00 947.20
and advances
other current 7508.80 7386.30 6007.80 4352.50 5927.50
assets
Total current 45260.30 48727.10 47272.80 47730.40 45713.30
assets
Current
Liabilities
short term 5549.50 5018.60 4647.70 5052.20 5001.90
borrowings
Trade payables 4362.30 3818.60 4176.20 4765.50 4542.60

other current 4657.50 4375.80 5418.60 5397.90 5769.10

liabilities
Short term 642.60 626.90 793.40 929.00 1130.20
provisions
Total current 15211.90 13839.90 15035.90 16144.60 16443.80
liabilities
Net working 30048.40 34887.20 27931.40 31585.80 29296.50
capital

http://annalsofrscb.ro 3177
Annals of R.S.C.B., ISSN:1583-6258, Vol. 25, Issue 6, 2021, Pages. 3174 - 3181
Received 25 April 2021; Accepted 08 May 2021.

In 2017 there was an increase of net working capital of Rs.4383.8 Crores as there is huge increase in investment and
in 2018 there was a decrease in Rs.6955.80 Crore due to the decrease in cash and cash equivalent and other current
assets. In 2019 there was an increase in 3654.4 Crores as there is an increase in trade receivables and cash and cash
equivalents. In 2020 there was an decrease in Rs.2289.30 Crores as there is decrease in current assets.

TABLE 3 REFERS TO THE RATIO FOR DEBTORS MANAGEMENT

Year Debtors turnover ratio Average collection

period (Days)

2016 5.40 67.59

2017 5.57 65.52

2018 5.07 71.99

2019 4.77 77.00

2020 5.06 72.13

In 2016 the debtors turnover ratio was 5.40 and the average collection period was 67.59 days. In 2017 the debtors
turnover ratio was 5.57 and the average collection period was 65.52 days. In 2018 the debtors turnover ratio was
5.07 and the average collection period was 71.99 days. In 2019 the debtors turnover ratio was 4.77 and the average
collection period was 77 days and in the year 2020 the debtors turnover ratio was 5.06 and the average collection
period was 72.13 days. There was an increase in debtors turnover ratio in 2017 and 2020. And there was a decrease
in debtors turnover ratio in 2018 and 2019. The average collection period increased in 2018 and 2019 and it
decreased in 2017 and 2020.

TABLE 4 REFERS TO THE RATIOS FOR INVENTORY MANAGEMENT

Year Inventory Days of

turnover ratio inventory ratio
( days)
2016 70.94 5.14

2017 88.77 4.11

2018 118.60 2.31

2019 130.17 2.80

2020 169.55 2.15

http://annalsofrscb.ro 3178
Annals of R.S.C.B., ISSN:1583-6258, Vol. 25, Issue 6, 2021, Pages. 3174 - 3181
Received 25 April 2021; Accepted 08 May 2021.

In 2016 the Inventory Turnover Ratio was 70.94 and the DSI was 5.14 days . In 2017 the Inventory Turnover Ratio
was 88.77 and the DSI was 4.11 days. In 2018 the Inventory Turnover Ratio was 118.60 and the DSI decreased to
2.31 days. Next year in 2019 the Inventory Turnover Ratio raised to 130.17 and the DSI was 2.80. In 2020 the
Inventory Turnover Ratio was highest to the ratio of 169.55 and DSI again decreased to 2.15 days. The Inventory
Turnover Ratio goes on increasing every year. The DSI is high in the year 2016 and 2017 and is lowest in the year
2020.

LIQUIDITY RATIOS

TABLE 5 REFERS TO THE CURRENT RATIO

YEAR C CURRENT
CURRENT CURRENT LIA RATIO
A LIABILITIES
ASSETS

2016 45260.30 15211.90 2.97

2017 48727.10 13839.90 3.52

2018 47272.80 15035.90 3.14

2019 47730.40 16144.60 2.95

2020 45713.30 16443.80 2.78

In 2016 the current ratio was 2.97 which indicates good short term liquidity. Next year in 2017 the current ratio
increased to 3.52 because of the overall increase in current asset and decrease in current liabilities. In 2018 the
working capital decreased a bit to the ratio of 3.14. In 2019 there is a further decrease in the current ratio. This stood
at a ratio of 2.95. Again, In 2020 the current ratio decreased to 2.78. There was an increase in the year 2017. The
current ratio went decreasing after 2017, which needs to be improved.

TABLE 6 REFERS TO THE QUICK RATIO

YEAR LIQUID CURRENT RATIO

ASSET LIABILITY

2016 44734.10 15211.90 2.94

2017 48371.20 13839.90 3.49

2018 43978.50 15035.90 2.92

2019 47301.10 16144.60 2.92

2020 45539.20 16443.80 2.76

http://annalsofrscb.ro 3179
Annals of R.S.C.B., ISSN:1583-6258, Vol. 25, Issue 6, 2021, Pages. 3174 - 3181
Received 25 April 2021; Accepted 08 May 2021.

In 2016 the quick ratio was 2.94 which indicates that the company owned more current assets than the current
liabilities.In 2017 the quick ratio increased to 3.49 due to the increase in inventory turnover ratio. During 2018 the
quick ratio dropped to 2.92 and in 2019 the quick ratio raised to 2.93 due to the increase in inventory turnover
ratio.In 2020 the ratio falls to 2.76.There was an increase in the year 2017.The quick ratio started to decrease after
2017 which should be improved.
TABLE 7 REFERS TO THE CASH RATIO

YEAR CASH AND CURRENT CASH RATIO

CASH LIABILITIES
EQUIVALENT

2016 8408.80 15211.90 0.552

2017 3516.60 13839.90 0.254

2018 2322.00 15035.90 0.154

2019 10390.20 16144.60 0.645

2020 10444.00 16443.80 0.635

In 2016 the cash ratio was 0.552. In 2017 the cash ratio decreased to the ratio of 0.254. Next year in 2018 cash ratio
further declined to 0.154. in 2019 there is a huge increase. The ratio was 0.645. In 2020 cash ratio slightly decreased
to 0.635. The ideal cash ratio is between 0.5-1. Therefore, In 2016, 2019 and 2020 the company was able to achieve
its ideal ratio.

SUGGESTIONS
On the basis of the above analysis and observation,the following suggestions are given to improve the overall
financial position of Wipro Limited.
1. It can be said that the overall financial position of the company is sound and healthy from the profitability point of
view.
2. The company should make an effort to increase the amount of sales to engage the great area of the market.
3. The company has to control its expenses and try to earn at a constant rate of return. It has to maximize its net profit.
4. Although the sales of the company are moderately increasing, the proportionate profit is not so much increased.
Therefore the management should focus on reducing its expenses.
5. The company should bring more efficiency to drive on productivity and automation.
6. The working capital management could be more efficient to improve the liquidity position of Wipro Ltd.
7. The company may take up few marketing strategies to survive in the global market.

http://annalsofrscb.ro 3180
Annals of R.S.C.B., ISSN:1583-6258, Vol. 25, Issue 6, 2021, Pages. 3174 - 3181
Received 25 April 2021; Accepted 08 May 2021.

CONCLUSION

The current study titled “A study on working capital management of Wipro Limited “was initiated with the objective
of studying working capital management, changes in working capital, receivables management, inventory
management, cash management and liquidity position through Ratio analysis and Statement of changes in working
capital. This study gives an idea of working capital management of Wipro Limited. The company is maintaining a
good profit over the years. But the company has lost its working capital due to the pandemic situation in the year
2020. So it has to be improved to work efficiently. On the basis of the analysis of the financial statement of Wipro
Limited, we conclude that the overall working stability and soundness have improved over the years and will
improve the financial performance in the upcoming years.

REFERENCE
1. https://www.moneycontrol.com/
2. https://www.business-standard.com/
3. https://www.worldwidejournals.com/indian-journal-of-applied-research-(IJAR)/
4. Financial Management – Intermediate course study material, Institute of Chartered Accountants of
India
5. Management accounting by R.S.N. Pillai and Bagavathi, (2015) 4th Edition Published by
S.Chand.
6. B.Uma Maheswari and PROF.B.Ramachandra Reddy (october,2012), “Working Capital
Management in Sugar Mills in Chittoor District of Andhra Pradesh”, Indian Journal of
Applied Research, volume 2, Issue no: 1, ISSN - 2249-555X.

7. G.L.Meena and I. Lokanandha Reddy (November,2016), “The Relationship Between Working

Capital Management And Profitability: Evidence from Sugar Industry of Telangana State”, Indian
Journal of Applied Research, Volume 6, Issue no 11, ISSN- 2249-555X.
8. Mr.V.Venkatachalam(June,2016), “A study on Working Capital Management on Mahindra and
Mahindra Private Limited”, Indian Journal of Research, Volume:5, Issue:6, ISSN:2250-1991.

9. Akash B. Selkari and Omdeo Ghyar (August,2019), “Does The Working Capital Has An Impact
On Profitability Of Indian Steel Industry”, International Journal For Research In Business,
Volume 2, Issue 8, ISSN- 2455-6114.
10. Dr.V. Bhuvaneswari (May,2020), working, “A Study on Working Capital Management of
Hindustan Unilever Limited(HUL)”, Indian Journal Of Research, volume 9 , Issue no:5 , ISSN-
2250 - 1991.

http://annalsofrscb.ro 3181