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Working capital management is an integral part of overall financial management.
The sphere of working capital throws a welcome challenge and opportunity to a financial manager.
According to Ganesan (2007), optimization of working capital means minimisation of related costs and maximisation of related income.
Efficient WCM will increase firms’ free cash flow, which in turn increases the firms’ growth opportunities and return to shareholders.
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Rachel Carson Sense Of Wonder Essay - Phd Thesis Working Capital Management
This is not an example of the work produced by our Dissertation Writing Service.After testing every industries liquidity, working capital efficiency level and financial leverage position, their performance has been compared through ratio analysis.There around 19 ratios have compared of every units.The trade-off between profitability and liquidity are essential, however most of the firm’s ultimate objective is to maximise profit, while disregarding the dilemma of liquidity.One objective should not be cost of the other because both of them have their important (Raheman & Nasr, 2007). (1996) also point out this fact saying ‘firms with glowing long term prospects and healthy bottom lines do not remain solvent without good liquidity management’.Examine the relationship between the CCC and firm profitability.Examine the relationship between CCC components which are account receivables, account payable and inventory turnover period with firm’s profitability.Consequently, efficient WCM is crucial in order to maintaining firms’ survival, liquidity, solvency and profitability.Thus, WCM has enormous influence to firm’s performance.The term working capital refers to short term funds required for financing the duration of the operating cycle in a business often known as “Accounting year”.These funds are used for carrying out the routine or regular business operations consisting of purchase of raw materials, payment of direct and indirect expenses, carrying out of production, investment in stocks and stores and amount to be maintained in the form of cash.