International Journal of Scientific Research and Engineering Development

This Project investigates the direct impact of inventory management practices on the financial performance and stability of a manufacturing firm, focusing specifically on as Mahavir Plastic Company. The study addresses the critical problem that ineffective inventory control often leads to increased holding costs stock outs, blocked working capital, and poor overall financial outcomes within the sector.
The research utilized an analytical research design, drawing upon secondary data from the company's internal records, including inventory reports, Balance Sheets, and Profit & Loss Accounts over a multiyear period. Key objectives were achieved by applying financial analysis tools such as Economic Order Quantity (EOQ), ABC Analysis, Inventory Turnover Ratio, and Comparative Financial Analysis.
The analysis revealed a critical finding, while the company experienced massive expansion and growth, this was accompanied by a significant operational risk, highlighted by a substantial increase in Closing Stock in one year. This indicated a serious misalignment in inventory practices, resulting in a large amount of unsold inventory tying up excessive capital and contributing to the depletion of cash reserves.
The findings emphasize that efficient inventory control is a strategic tool essential for ensuring cost efficiency, improving liquidity, and maintaining sustainable business growth. The report concludes by offering practical, data-backed recommendations derived from the EOQ and ABC analysis to optimize stock levels, minimize waste, and enhance the firm's overall financial health.