Management of working capital effectively drives the part of the business either towards success or failure of the organisation in the short or the long run because it determines the profitability and the liquidity aspect of the business. The success of any organisation depends upon the handling of working capital by the manager and in my case entrepreneurs who effectively manages the components of the working capital which includes cash, debtors, creditors and inventory as it is very important from the point of view of the organisation to manage a balance between profitability and liquidity while carrying out the day-to-day operation. Working capital reflects a firms’ ability to meet day-to-day operating expenses and also acts as an indicator of a firm’s short-term financial health. So a firm has to plan the effective utilisation of its working capital in order to maintain equilibrium between liquidity and profitability of the business.

KEYWORDS: Working Capital Management, Components of Working Capital, Liquidity, Profitability.