A SUDY ON PERFORMANCE OF ASSET AND LIABILITY MANAGEMENT ANALYSIS OF TEXTILES
ABSTARCT :
Asset and Liability Management (ALM) is a vital financial practice that focuses on managing the risks related to mismatches between assets and liabilities within an organization. It is a strategic approach that ensures a company maintains adequate liquidity, manages interest rate risks, and achieves financial stability by balancing its resources and obligations. Effective ALM is especially important in industries where capital requirements are significant, and the timing of cash inflows and outflows can impact the overall health of the business. The textile industry, known for its cyclical nature and exposure to raw material price fluctuations, is one such sector where robust ALM practices are crucial.
The textile sector is one of the oldest and most significant industries globally, contributing substantially to employment, exports, and economic growth, particularly in developing economies. Textile companies invest heavily in machinery, raw materials, and working capital. These investments are funded through various sources, including internal accruals, long-term loans, and trade credit, creating a complex structure of assets and liabilities. Managing these efficiently is essential for sustaining operations, ensuring solvency, and enhancing profitability.
In the textile industry, the challenges of managing working capital efficiently are pronounced due to the nature of production cycles, inventory holding, and credit sales to distributors and retailers. A mismatch in asset and liability profiles can lead to liquidity crunches, increased borrowing costs, or underutilized assets, all of which negatively affect the company’s performance. Therefore, understanding and analyzing asset and liability management becomes imperative for these firms to remain competitive and financially sound.
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