The importance of working capital in an industry cannot be overstressed, as it is one of the important causes of success or failure of an industry. Whatever be the size of a business, working capital is its lifeblood. For running a business successfully, an adequate amount of working capital is essential. A firm with shortage of working capital will be technically insolvent. In India, paucity of working capital has become a chronic disease in the industrial sector. According to Gitman, the goal of working capital management is to manage each of the firm’s current assets and current liabilities in such that an acceptable level of net working capital is maintained. The firm has to invest enough funds in current assets for generating sales, where the companies need good management practices over the working capital to ensure the same. However this call for a systematic and integrated approach towards the utilizition of companies’ assets with maximum efficiency enables efficient management of current assets and provides analytical insights into its impact on profitability. In this research paper an attempt has been made to analyze the working capital levels and their composition, turnover and the liquidity position of Sirpur Paper Mills Limited to bring out its usefulness for effective liquidity management. This paper also analyse the impact of working capital on profitability of the company.

KEYWORDS: working capital, industry, wages ,debt and equity