Working Capital Management in Electrical Equipment Manufacturing Companies

Abstract

This study, titled "Working Capital Management in Electrical Equipment Manufacturing Companies," evaluates the operational cash cycles, asset distributions, and financial feasibility of implementing automated working capital optimization platforms. Electrical equipment manufacturing is characterized by long inventory holding periods, substantial accounts receivable, and capital-intensive production pipelines. A five-year project lifecycle (2021- 2025) of a bank-integrated cash management platform is analyzed using standard capital budgeting parameters: Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period (PBP), and Benefit-Cost Ratio (BCR). Quantitative analysis indicates that raw material and finished goods inventories represent 40% of working capital assets. Deploying automated invoice verification and inventory tracking reduces the cash conversion cycle from 75 days to 18 days, maintaining a quick ratio above 1.22 and supporting a net sales volume of 2,800 Crores by 2025. The financial model yields a positive NPV of 284.5 Crores and an IRR of 38.6%, far exceeding the hurdle rate. The study concludes that allocating capital toward digital cash management systems is highly viable, providing heavy engineering manufacturers with enhanced liquidity buffers and reduced interest costs.