The working capital management refers to the management of working capital, or precisely to the management of current assets. A firm's working capital consists of its investments in current assets, which includes short-term assetscash and bank balance, inventories, receivable and marketable securities. Therefore, the working capital management refers to the management of the levels of all these individual current assets. On the other hand, inventory, which is one of the important elements of current assets, reflects the investment of a firm's fund. Hence, it is necessary to efficiently manage inventories in order to avoid unnecessary investments. A firm, which neglects the management of inventories, will have to face serious problems relating to long-term profitability and may fail to survive. With the help of better inventory management, a firm can reduce the levels of inventories to a considerable degree e.g., 10 to 20% without any adverse effect on production and sales. Thus, inventory is a vital factor in business operations.This paper tries to evaluate the effect of the size of inventory and the impact on working capital through inventory ratios, working capital ratios, trends, computation of inventory and working capital, and liquidity ranking. Finally, it was found that the size of inventory directly affects working capital and it's management. Size of the inventory and working capital of Indian Farmers Fertilizer Cooperative Limited (IFFCO) is properly managed and controlled compared to National Fertilizer Ltd. (NFL).

The developing economies generally face the problem of inefficient utilization of resources available to them. Capital is the scarcest productive resource in such economies and hence a proper utilization of these resources promotes the rate of growth, cuts down the cost of production and above all, improves the efficiency of the productivity system. Fixed capital and working capital are the dominant contributors to the capital of a developing country. Fixed capital investment generates productive capacity, whereas working capital makes the utilization of that capacity possible. Thus, the study of the working capital behavior occupies an important place in financial management.

The earlier emphasis of financial management was more on a long-term financial decision. Working capital management, which is concerned with short-term financial decision, appears to have been relatively neglected in the literature of finance. Leslie R Howard, rightly points out that a deeper understanding of the importance of working capital and its satisfactory provisions can lead to not only a material saving in the economical use of capital, but also assist in furthering the ultimate aim of a business, namely, that of maximizing financial returns on the minimum amount of capital which need to be employed.

On the other hand, inventory, which is one of the important elements of current assets, reflects the investment of a firm's fund. Hence, it is necessary to manage inventories efficiently in order to avoid unnecessary investments. A firm, which neglects the management of inventories, will have to face serious problems relating to long-term profitability and may fail to survive. With the help of better inventory management, a firm can reduce the levels of inventories to a considerable degree e.g., 10 to 20% without any adverse effect on production and sales. Thus, inventory is a vital factor in business operations. For the survival of business, the firm should have requisite levels of inventories. It should neither be excessive nor inadequate.

Inventory and Working Capital Management, Financial management, Indian Farmers Fertilizer Cooperative Limited, IFFCO, National Fertilizer Ltd., NFL, Regression analysis, Quick Ratio, Microfinance Organizations, Microfinance Development Council.