Working Capital Management Research Papers

Working Capital Management Research Papers-17
This is mainly because the management of these funds ensures that there is effective use of resources (Lazaridis & Tryfonidis, 2006).In every business, working capital is an important and critical part of an investment because it is impossible for an organization to run without these funds.The working capital of an organization is also a major determinant of the profitability of the organization (Boisjoly,2009) Consequently, the determination of strategies to manage the working capital effectively is very important to ensure that the organization attracts investors by increasing its profitability and reducing its risk.

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Working capital refers to the funds that are used to meet short-term responsibilities or the funds used to carry out the day-to-day activities of an organization.

This necessitates the research on proper mechanisms to manage these funds to ensure that the management of the organization pays the issue enough emphasis.

Working capital is important in maintaining sound profitability and liquidity levels.The lack of a proper working capital interrupts the production process andincapacitates the organization, which may lead to the foreclosure of the business.The capacity to provide credit sales to the market is important in sales promotion, without adequate working capital, the organization is unable to provide credit sales since it is dependent on the available funds for the production process (Nazir& Afza, 2009).During the times of recession organizations seek strategies that can be helpful in the improving the chances survival of the organization.External market factors play a role in the organization operations and the organization has minimal or no control of these factors.The current economy has made an increase the cost of capital and subsequently, this has necessitated more emphasis to be placed on working capital management.Increase in the working capital allows the organization to run with minimal external funding.Proper management of the organization’s working capital allows the organization to gain a higher market share and maintain good liquidity levels.The author describes the major components of working capital as cash received, receivables, and inventory.This use of working capital in the day-to-day operations is efficient and affordable as compared to external funding.This has made the management of working capital important to the management to ensure that the organization is profitable and maintains a high level of liquidity (Samiloglu & Demirgunes, 2008).


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