Financial Management Practices and Profitability of Modern Rice Milling Firms in Kangayam Cluster, Tamil Nadu

Abstract

The study analyses the financial management practices adopted by modern rice milling firms in the Kangayam cluster of Tamil Nadu. For study, 40 firms were selected using simple random sampling method and data were collected through personal interviews with the owner/managers of the firm using a pre-tested interview schedule. The data pertaining to the financial performance were obtained from the records maintained by the firms for three financial years, from 2011–12 to 2013–14. The factor analysis and multiple regression analysis were carried out. Significant differences among the fully and partially modernized rice milling firms have been observed in the preparation of cash budget, setting-up credit policy, preparation of inventory budget and review of inventory turnover, capital budgeting in investment analysis and accounting practices. The measures of financial management practices explained 58.4 per cent (R-squared value) of the variation in the profitability measure return on equity.