ABSTRACT

Working capital plays an important role in any organization. Managing working capital is more difficult than managing fixed capital and the organization is expected to pay utmost attention in terms of working capital so as to ensure tradeoff between profitability and liquidity .In this context this paper has made an attempt to identify the key variables in influencing the profitability of the firm while focusing on working capital decision. The study further evaluates the extent to which profitability of the firm moves in the direction with identified key ratios.

Key words: Liquidity, profitability, tradeoff and Regression.