Impact of Working Capital Management on Profitability a Case Study of Infosys Limited (FY2021–FY2024)

By

Dhiraj Thakur

MBA (Finance) Jagannath University, Jaipur

Enrollment No.: 0101240024 | Batch: 2024–26

Department of Management Studies

Email: thakurdhiraj072dt629256@gmail.com

Dr. Suresh Saini

Assistant Professor, Jagannath University, Jaipur

Abstract:Working capital management (WCM) is a fundamental component of corporate financial strategy, directly influencing a firm's liquidity, operational efficiency, and overall profitability. This research paper empirically examines the impact of working capital management on the profitability of Infosys Limited — one of India's largest information technology companies — over the fiscal years 2021 to 2024. The study utilises key financial indicators including the Cash Conversion Cycle (CCC), Days Sales Outstanding (DSO), Days Payable Outstanding (DPO), Net Working Capital (NWC), Current Ratio, Net Profit Margin (NPM), Return on Assets (ROA), and Return on Equity (ROE). Secondary data has been sourced from Infosys's audited annual reports and publicly available financial statements.The findings reveal a strong inverse relationship between the Cash Conversion Cycle and profitability ratios. Infosys reduced its CCC from 49 days in FY2021 to 26 days in FY2024— a 47% improvement — while ROE grew from 27.8% to 33.1% and ROA improved from 19.2% to 22.0% over the same period. Revenue expanded from ₹1,00,472 Crore to ₹1,53,670 Crore, representing a CAGR of approximately 15.3%. The paper concludes that efficient working capital management, particularly through aggressive receivables collection, strategic extension of payables, and optimal liquidity maintenance, significantly contributes to enhanced firm profitability. Recommendations are provided for IT sector firms seeking to leverage working capital as a strategic tool for sustainable value creation.