Analysis of Working Capital Management in the Retail Sector using Financial Ratios: A review of More Retail Limited

DOI:10.34047/MMR.2020.8201

Abstract

The role of Working Capital and its Management is important in evaluating the financial performance in almost all kinds of industries, but it is more important in Multi- Chain Retail sector due to its unique nature. The current Study uses ratio analysis and working capital trends as a technique to understand Working Capital Management with four years of financial data since 2016 to 2019 collected from M/s. More Retail Limited (“Company”) which has presence in Supermart and Hypermart formats. The current Study observed that during the period 2015-16 to 2018-2019, the working capital of the Company has increased in the year 2018-2019 against 2015-16. In the year 2015, there was a decrease in the working capital. It assumes that the current ratio of the Retail Sector is around 3, while it’s noticed that the Current Ratio of More Retail Limited was 1.30 in the year 2018-19. The Quick Ratio shows a satisfactory position from the year 2018-2019 as against 2015-16. While the Debt-equity ratio changed from -0.78 to 3.11 in 2018-19. The Proprietary Ratio of the company was changed from -6.51 to 0.11. The Fixed asset turnover ratio indicates the relationship between sales and fixed assets was improved to 21.67 in 2019 from 18.67 in 2016 indicating proper utilization of Assets. The Working Capital of More Retail Limited has shown an increase in trend in the year 2018 -19 which was funded through long-term sources.