WORKING CAPITAL POLICIES AND FINANCIAL HEALTH OF SEA FOOD MANUFACTURING COMPANIES IN KERALA

Abstract

The present study examines the relationship between working capital policies and financial health of seafood manufacturing companies in Kerala. The study intends to investigate how various working capital policies affect the financial health of these companies. This study uses a quantitative method that draws on the financial data of five seafood manufacturers in Kerala. This analysis was carried out with the help of financial ratios, Z score model, descriptive statistics,correlation and regression model to determine the working capital policies, financial health and relationship between the dependent variable and two independent variables that are "CATA" and "CLTA" respectively.The result concluded that the companies follow conservative investment policy and aggressive financing policy during the study period. The average Z score was 1.039, which means that the companies are in a severe condition with high bankruptcy risk.The regression statistics shows a positive correlation between the working capital policies and financial health, with a multiple correlation coefficient (R) of 0.6794. The model reveal approximately 46.10% of the variation due to dependent variable, as shown in coefficient of determination (R-square) = 0. Both "CATA" and “CLTA explains the importance of these two variables in understanding how variations on R1 are produced. The study concluded that there is significant impact of working capital policies on financial health of seafood firms. These findings can be used to improve the analysis of factors affecting financial health and decisions based on model’s coefficient as well as its statistical inference.

Key words: Financial health, working capital policies, Z-Score