CASH POSITION AND PROFITABILITY OF INDIAN TELECOMMUNICATION SECTOR

ABSTRACT

One of the important activities in a business is to manage its cash position. Cash management is concerned with management of current assets and current liabilities which is important for day to day activities. The management of cash has been regarded as one of the conditioning factors in the decision-making in any business. As Indian telecommunication sector is the 2nd largest telecommunication sector in the world, the study has analyzed cash position and profitability of listed Indian telecommunication companies over a period from 2010-2019. The objective of the study was to identify the relationship that exists between cash position and profitability and to establish the causality that exists between the profitability and cash position in context to Indian telecommunication sector. The study was carried out by analyzing the cash position and profitability of top two companies i.e., Bharti Airtel and Vodafone Idea selected on the basis of number of subscribers. The study was carried out by analyzing the two companies’ profit measured by return on assets and return on equity as the dependent variable and the cash position as liquidity measure in relation to the sales, total assets and current liabilities as the independent variables. Pearson correlation analysis was used to find out the relationships between these variables and regression analysis was used to find out the impact of cash position on profitability. SPSS was utilized to support the analysis and to provide a basis for the conclusions drawn. Based on the descriptive analysis, there is no big fluctuation in the cash position ratios, return on equity and return on assets among Vodafone-Idea and Bharti Airtel based on the correlation analysis, there is a significant relationship between cash position ratios and return on equity & assets in the Bharti Airtel. In contrast; there is no significant relationship between cash position ratios and return on equity & assets in the Vodafone-Idea in Indian context. Further, the Bharti Airtel, cash position ratios have the influence or impact on the profitability measures comparing with Vodafone-Idea in the Indian context.

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