A study of negative working capital verses profitability with reference to Tesla Inc
- Abhigyan: Management Journal from Fore
- 40(4), Jan-Mar, 2023: p.34-41
This study explores an important aspect of working capital management that has never been explored in detail. All the previous studies on working capital management have advised to maintain an optimal level of liquidity in a company to run efficiently and smoothly, they consider negative working capital as a sign of illiquidity which is not always the case. This paper analyses the components of working capital management of EV automobile manufacturing firm Tesla and collates it with the growth and profitability of the firm. It analyses the firm’s working capital components empirically using statistical analysis. The paper also comprehensively explores the new concepts of reporting proposed by previous studies to overcome the implications and perception towards negative working capital. The study conducted on Tesla Inc. empirically proves that the working capital components alone are not responsible for the profitability of the firm. – Reproduced
Negative working capital, Capital structure, Cash conversion cycle, Profitability, Liquidity.