EXPLORING THE CORRELATIONAMONG EFFICIENCY OF INVENTORY MANAGEMENT AND PROFITABILITY: A COMPARATIVE ANALYSIS OFINDIAN TEXTILE INDUSTRY AND CONSUMER GOODS INDUSTRY

Inventories are indispensable for the successful operation of manufacturing firms. It forms a principal constituent ofthe aggregateresources of every business unit and it is based on the inventory that important decisions are made at all phases of production, delivery,and transactions. Maintaining inventory also includes certain costs like carrying or holding costs in conjunction with the opportunity cost. Consequently, it is essential that excellent inventory management be performed to make sure economic development andproductivity of the organization. Given the important contribution of the Textile and Consumer Goods Industry to the Indian economy, this article evaluates the correlationamongefficiency of inventory control and profitability as a relative analysis of Indian firms operating in textile and consumer goods industry between 2009 – 2019 years. Research data consists of debt ratio, current ratio, inventory conversion period, inventory turnover ratio, return on assets, gross profit margin, firm sizecalculated based on the data obtained from Prowess software. In this study, the correlationamong inventory management and profitability is examined by utilizing SPSS-20 package with regression analysis, correlation and descriptive statistics. The findings from the analysis are interpreted as comparatively. It is observed that inventory conversion period has an adversecorrelation with profitability ratios and inventory turnover ratio is adverselyassociated with the gross profit margin in textile industry. Consequently, it is established that there is a positive connection among inventory management and profitability in textile manufacturing firms. It isalso found that there exists no connection among inventory management and profitability in consumer goods manufacturing firms.