An Enquiry Into The Credit Period At Manufacturing Industries At Chennai – A Working Capital Perspective

Research Article
Navena Nesa Kumari I and Victor Louis Anthuvan M
Creditors turnover period, Average payment period, Net operating profitability, Working capital management, Manufacturing Industries.

Creditors turnover period is an important component of the working capital management. It is a technique adopted by the industries to pay for its vendors. It also measures the goodwill and the effectiveness of a company’s credit management. The present study aims to contribute on the impact of the management of creditors turnover period measured by Average payment period on profitability. Of leading manufacturing companies of CNX 500 listed in NSE from 2010-2016. The study involves both primary and secondary data. The study aims at examining the effectiveness of Average Payment Period of various manufacturing firms from 15 sectors. The Net Operating Profitability used as a measure of organisational performance. The study involves about 162 companies for the secondary data analysis. The primary data confines with 34 companies available in and around Chennai. The study reveals that Construction, Textile, Food, Steel & Aluminium, Pharmaceutical, Electrical & Equipment, Cement, Pump, and Engineering had a significant relationship between Average Payment Period and Profitability. The research study states that effective credit policy should be adopted by the manufacturing companies in order to face the competitive market.