Liquidity is an important aspect of financial management. Hence, it is essential for an to study the trends of liquidity. This article presents a comparative study of liquidity trends of SAIL and TISCO. It provides a basis to judge whether the liquidity policy pursued by the companies are satisfactory or some improvement is required in the sphere of financial management. The statistical methods such as index number, time series analysis, regression and chi-square test have been employed in this study to examine the liquidity position of both the companies. This article also analyzes the working capital and sales relationship based on working capital turnover ratio and statistical techniques of regression. The statistical technique of hypothesis testing has further been used to analyze the significance of differences between actual and estimated values of working capital, current assets and current liabilities of both the companies. On the whole, the liquidity policies pursued by SAIL and TISCO have been precisely and effectively presented.

Trend analysis plays a vital role in determining the direction and tendency of working capital. It is a dynamic technique of financial analysis, showing changes over a period of time, which indicates the direction in which financial position is pursued. Since liquidity is an important aspect of financial management, it is necessary for an analyst to study its trend and direction. While examining the liquidity management of an industry, a study should also be made about the trend of the various components of the liquidity movements to provide a wide base. This analysis will provide a base to judge whether the practice and prevailing policy of the management with regard to liquidity is satisfactory, or an improvement is required for managing the working capital funds.

Further, any one trend by itself is not very important and, therefore, comparison of related trends should also be made by an analyst. For example, a rising trend in working capital coupled with downward trend in sales would normally show an adverse situation, while an increasing trend of current assets, i.e., inventories accounts receivables, cash and bank balances and other current assets with a downward trend of current liabilities would normally be viewed as a favorable situation.

Liquidity Trends in the Indian Iron and Steel Industry: A Comparative Study of SAIL and TISCO, financial management, SAIL and TISCO, statistical methods, index number, time series analysis, regression, working capital, current assets and current liabilities.