Impact of Working Capital Management on a Firm’s Profitability: A Study on Bharti Airtel

( Vol-11,Issue-4,July - August 2025 )

Author(s): K. Sathish, Syed Muskan

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Page No: 069-073
DOI: 10.22161/ijaems.114.8

Keywords:

Working capital management, liquidity ratios, profitability analysis, cash conversion cycle.

Abstract:

This comprehensive study investigates the critical relationship between working capital management and profitability in Bharti Airtel Limited, India's second-largest telecommunications provider. Against the backdrop of intense industry competition and capital-intensive operations, the research addresses three fundamental questions: (1) How has Airtel's liquidity position evolved during FY2019-2024? (2) What efficiency gains have been achieved in working capital utilization? (3) To what extent has working capital optimization contributed to profitability improvements? Employing a mixed-methods approach, the study analyzes five years of financial data through ratio analysis, trend examination, and statistical correlation. Key findings demonstrate a 29% improvement in liquidity ratios (Current Ratio: 0.62->0.80), a 32% increase in working capital turnover efficiency (5.3->7.0), and a remarkable profitability transformation from -8.9% to +10.8% net margins. Statistical analysis reveals a strong positive correlation (r = 0.959) between liquidity enhancement and profitability growth. The paper contributes to working capital theory by demonstrating how telecom firms can strategically leverage negative working capital conditions. Practical implications include recommendations for optimizing cash conversion cycles and balancing liquidity risks in capital-intensive industries. Limitations and future research directions are discussed.

Received: 10 Jun 2025; Received in revised form: 04 Jul 2025; Accepted: 08 Jul 2025; Available online: 11 Jul 2025

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