Working Capital Performance in Small and Medium-Sized Enterprises (SMEs)

Author

Lohitha Krishna Dasari, Dr. Golli Mohan

Abstract

 Small and medium-sized enterprises (SMEs) provide employment, support household incomes and keep local markets active, yet most of them operate with very thin cash reserves. For such firms, the routine handling of short-term funds often decides whether the business remains steady or runs into difficulty. This paper studies the working capital performance of M Tek Copper Ltd. (formerly Madhav Copper Ltd.) over the five financial years from 2020–21 to 2024–25, using secondary data published by the company. Net working capital, the current ratio and the quick ratio were worked out from the reported current assets, current liabilities and inventory, and the structure of current assets was examined through inventory, trade receivables and cash. To make the years easier to compare, three of these indicators were also converted into a simple ordinal score from 1 to 5. Net working capital remained positive in every year, increasing from ₹31.58 crore to ₹58.13 crore. The current ratio went up from 1.39 to 12.99, largely because current liabilities came down from ₹80.42 crore to ₹4.85 crore. Cash and bank balances, on the other hand, stayed extremely low throughout, which means the healthy-looking ratios need to be interpreted with caution.

Keywords

working capital, SMEs, liquidity, current ratio, quick ratio, net working capital, secondary data.

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References

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