Working Capital Management

Account Receivables are the major components of current assets. It is approximately one-third of the total assets of a company. Previous researchers showed that firms increased trade receivables when they have profitability problems, and reduce these during cash flow problems. This study shows how textile companies manage their receivables specially accounts receivables. The sample companies are listed in Dhaka Stock Exchange Ltd. and Chittagong Stock Exchange Ltd. as on April 30, 2013 and the study is based Annual Reports for the period of 2006 to 2010. In this study five hypotheses are tested and various ratios such as ratio of receivables to current assets, receivables to total assets, receivables to sales, receivables to turn over and average collection period also calculated. Researchers also examine whether these ratios are significant or not for the textile companies in Bangladesh. The result shows that as per the ratio of receivables to current assets 30% of the companies do...

Purpose This study examines the relationship between working capital efficiency and firm value and the influence of financing constraints on this relationship. Design/methodology/approach Data from 192 firms spanning a period of 10 years (1999 - 2008) are used for this purpose and analyzed using the OLS regression technique. Findings The study finds that improvements in working capital efficiency through reduction in working capital investment results in higher firm value. However, this relationship is influenced by the financing constraints faced by a firm. For financially constrained firms, working capital efficiency significantly increases firm value but it is found to be insignificant for unconstrained firms. Originality/value To the author's knowledge, this is the first study on the value of working capital in Malaysia or in any emerging market. Most studies on working capital valuation concentrate on developed countries and that too are only a handful. Hence this study con...

The principal aim of the study is definitely to inspect the influence of working capital management practice on firm profitability of the Turkish chemical, petrol, and plastic manufacturing firms listed on Istanbul Stock Exchange (ISE) for a period of five years (2012-2016). Hence, working capital components that employed as independent variables were; accounts receivable period (ARP), inventory conversion period (ICP), accounts payable period (APP), and cash conversion cycle (CCC). The profitability measures that destined to be used as dependent variables were; both return on assets (ROA) and return on equity (ROE) and in addition to that, current ratio (CR), debt ratio (DR), and sales growth (SG) were intended to be applied as control variables. Correlation and regression analysis were employed as a statistical testing tool for the study to uncover the association between independent and dependent variables and then reach the possible goals of the study. As a result, the study witnessed that firm profitability has a positive and negative correlation with ARP and ICP variables respectively. The result also disclosed that ROA has a negative and positive correlation with APP and CCC variables respectively whereas ROE has a positive and negative correlation with APP and CCC variables respectively. Finally, the researcher recommends shortening CCC and APP variables and also building strong communication among purchasing, production, and marketing departments to strengthen the entire business operations and overcome scarcity or excessive inventories.

This paper aims to determine the impact of working capital management policy and financial leverage on financial performance of Jordanian companies measured in terms of net income, return on equity (ROE) and return on asset (ROA). Pearson’s rank correlation test, ANOVA F- test, and multiple regression analysis were used on 45 companies included in the industrial sector in Jordan ranked in terms of gross revenues. Results of the study indicated that firm’s working capital management policy, financial leverage, and firm size have significant relation to net income. However working capital management policy has no significant impact on return on equity (ROE) and return on assets (ROA).

Il testo sintetizza i punti principali del toyotismo come modello di organizzazione del lavoro che si è imposto sin dagli anni Ottanta nel settore automobilistico mondiale, per divenire poi un modello produttivo egemone in tutte le imprese ad alta intensità di lavoro e innovazione tecnologica. L'importanza del modello si è mostrata non solo nella capacità di imporsi con forza come innovazione organizzativo-produttiva,  ma nel divenire paradigma del nuovo modo di produrre e di lavorare, estendibile quindi al mondo del lavoro nella sua generalità. – Superando molti caratteri fondamentali del fordismo occidentale, esso, partendo dal Giappone, ha segnato una nuova epoca del lavoro e tracciato una nuova direzione per tutte le società a capitalismo avanzato. Una rivoluzione che ha spazzato via le illusioni legate al determinismo tecnologico e riproponendo al centro della produzione il lavoro umano, quale chiave in grado di leggere le trasformazioni e la complessità del mercato globale e della società odierni.
In cosa consisté l’affermarsi di tale modello produttivo? Come si impose rispetto a programmi di rilancio industriale apparentemente più sofisticati in termini di fattori tecnologici o ad automazione spinta? Il testo mostra come non si trattò solo di un’intuizione tecnica o «di mercato» ma di una filosofia generale di organizzazione sociale della produzione dai connotati sindacali e politici decisamente ambigui.

Corporate finance literature and finance practitioners have the notion that the efficient working capital management (WCM) affects firm value. This study investigates the value effect of working capital management, using a sample of 44 listed companies on the Colombo Stock Exchange (CSE) over the period 2011-2015. The CSE is currently recognized as a high growth frontier market (FM) in the world.  The efficiency of WCM is measured using the Cash Conversion Cycle (CCC) and its components while firm value is measured by the Tobin Q ratio. The firm size, leverage and sales growth are used as the control variables. Using panel data regression methodology (the pooled OLS and fixed effects regressions), the study finds that CCC is inversely related to Tobin Q, suggesting that managers can create value for their shareholders by efficiently managing investment in working capital of their firms.

Estudiante: Andrés David Gutiérrez-26 años CASO 1 CASO OXYLANE-DECATHLON "la capacidad general de adaptación de la empresa que le permite afrontar los cambios necesarios en orden a mantener o mejorar su posición competitiva" Albizu ¿Cuáles son los principales motivos que han conducido a Decathlon a la adopción de un modelo de gestión descentralizada? Desde tu punto de vista, menciona las ventajas e inconvenientes de este tipo de gestión. La primera cosa que ves al entrar a cualquier Decathlon de España es la variedad de productos de todos los deportes que hay, todo los productos están organizados estratégicamente, desde los calcetines de tennis hasta las mallas de ballet. La descentralización por la que opta esta empresa es la adecuada y necesaria para manejar tanta variedad de productos, si se quiere que una persona encuentre todo lo necesario para practicar cualquier deporte hay que tener en cuenta los detalles más básicos, y que a lo mejor son insignificantes para el vendedor, pero muy importantes para un deportista. Esto no sería posible si no existiera descentralización, se necesita una delegación de poder para no dejar por fuera todos los detalles, los cuales son indispensables para que Decathlon. Como ya he mencionado anteriormente, no hay sitio más completo para encontrar cualquier producto deportivo, hasta la más pequeña herramienta deportiva se consigue, para esto se necesita gente competente que esté a cargo de cada sección para poder satisfacer a los clientes más exigentes, es decir, Decathlon prestara un servicio al cliente casi personalizado con expertos en cada sección. Una sola persona a cargo de todos los productos, de todas las secciones y deportes de todos los países sería un caos, en este tipo de empresas donde los detalles son tan importantes para ser referentes en el mercado deportivo, la descentralización es el mejor camino. Esta sería una ventaja de este tipo de organización. Una desventaja puede ser, el hecho de que es necesario más personal y a la vez este personal manipula más la mercancía. El hecho de que no exista una centralización, también conlleva a que no haya un orden en la contabilidad, en el inventario puede llegar a ver una duplicidad en los productos debido a que hay varios delegados, pero esto sería un mal menor, teniendo en cuenta, las ventajas que se tienen al descentralizar.

The relationship between working capital management and profitability of Indian vehicle manufacturers is examined in this article for the period 2006-2020. The research is essential for investors, competitors, policymakers, and companies at the time since that operates as a growth direction. Thus, it is believed that a well-designed and managed working capital management system would contribute favorably to the profitability and value of the business. Efficient working capital management is crucial for every company organization's existence, liquidity, solvency, and profitability. Additionally, effective working capital management adds value to any business. To compete in a highly complicated and dynamic market, it is difficult for businesses to maximise their working capital as a true competitive advantage for profit leverage. To manage working capital optimally, the manager must carefully control the link between profitability and working capital components. As such, this study aims to quantify the link between working capital management and profitability for four Indian automotive passenger vehicle manufacturers included on the CMIE database. Multiple Backward Step Regression is used to analyse and derive conclusions from the data. The current asset turnover ratio was used as a dependent variable, whereas the components of working capital were used as independent variables. Additionally, the selling growth rate, business size, leverage, and age all have an effect on a firm's profitability. As a result, this article gives managers with new insight into how to increase their firm's profitability through effective working capital management.

India was the world's second-largest steel producer. Capital structure is currently a contentious topic. The capital structure must have a fair proportion of debt and equity. The paper try to study the impact of capital structure on financial performance in Steel companies.

Working capital management is determined endogenously by firm –specific variables such as size, age, profitability, market share (power), sales growth, operating risk and operating cash flow. On the other hand, it is determined exogenously by macroeconomic factors such as GDP, interest rate and tax rate. The ultimate goal of working capital management is to achieve an optimal level of liquidity and profitability contingent upon availability of cash, inventory and other current assets. Optimal level of working capital maximizes the firm’s value, hence a trade-off between liquidity and profitability. A manager who invests heavily on working capital decreases the firm’s profitability and imposes opportunity cost of funds. In the light of the foregoing, the paper attempts a discourse on the determinants of working capital management. To achieve this onerous task, we identify and analyze opinions, comments, suggestions and conclusions of various researchers and scholars alike in this cri...

Working Capital management requires making decisions on the amount and composition of the current assets holdings and the means of financing them. This paper investigate the relationship between the variables of working capital management and company profitability with emphasis on quoted Nigerian Cement producing firms from 2001 to 2010, all cement companies that are listed on the Nigerian Stock Exchange form the population of the study. Using a panel data analysis the study employed GLS regression, descriptive statistics, correlation as well as simple graphs as analytical tools. The study discovered that working capital variables of inventory turnover, debtors' collection period, average payment period and the cash conversion cycle significantly affect the profitability of quoted cement companies in Nigeria. For this reason, the companies should significantly raise their level of investment in working capital; such investment in current assets should heavily be concentrated in raw materials and production consumables to improve production and turnover.

Abstract
Companies can use working capital management as an approach to influence their profitability. This paper studies the impact of working capital management and its components upon the profitability of Bangladeshi pharmaceuticals companies. Cash Conversion Cycle, Average days of collection period, inventory turnover period, Deferred payables Period are used as a comprehensive measure for working capital management and Gross Operating Profitability used as a measure for profitability.

The purpose of this study is to analyze the impact of working capital management on companies’ profitability from Bangladesh County. The relation between the components of the working capital management and profitability is examined using Pearson correlation analyses and using a sample of 14 annual financial statements of companies covering period 2009-2010. The conclusion to our study is that there is a positive relationship among deferred payables period, inventory turnover period and corporate profitability. On the other hand, there is a negative relationship among cash conversion cycle, average days of collection periods and corporate profitability.

Keywords: Working Capital Management, Corporate Profitability, Cash Conversion Cycle, Average days of collection period (AR turnover Period), Inventory turnover period, Deferred payables Period, Liquidity.

The management of liquidity and cash conversion cycle are considered to be very important issues while making the financial decisions and they usually have an effect on the profitability of the firm. The purpose of this paper is to investigate the relationship that cash conversion cycle and liquidity have with profitability in case of a manufacturing company Dabur Nepal Private Limited (DNPL). This is a case study of DNPL. The audited financial statements of DNPL covering a period of 10 years from 2006-2015 were used for data collection. So, this study is based on secondary data. Profitability has been measured in terms of Return on Assets (ROA), Return on Equity (ROE), and Earnings per Share (EPS). The components of cash conversion cycle (CCC) that have been used are Inventory Conversion Period (ICP), Days Sales Outstanding (DSO) and Payable Deferral Period (PDP). Current Ratio (CR) and Quick ratio (QR) have been used as liquidity ratios. The correlation analysis and regression analysis have been used to find the relation that liquidity ratios, CCC and its components have with profitability. All the findings were tested at 0.10 level of significance. The study results confirm that there is statistically significant relationship of CCC and its components with profitability but there is not statistically significant relation of liquidity and profitability in case of DNPL.

ifference between current assets and current liabilities is known as working capital. It is necessary for every business to have enough amounts of liquidity to carry out theirday-today operations without any obstacles. The main objective of the working capital management is to maintain the balance between current assets and current liabilities. This study examined the relationship between working capital management and firms' profitability. Working capital management was measured with cash conversion cycle and liquidity level of working capital was indicated by current ratio and quick ratio. The control variables like; current assets to total assets, current liabilities to total assets, gearing ratio and firm size (measured in terms of natural logarithm of sales) were used for measuring the working capital management. The profitability was determined in terms of return on total assets. The empirical relationship of the variables in this study was found with the panel data analysis of 20 listed companies in Sri Lanka: Evidence from standard and poor's index companies for a period from 2011 to 2015. Descriptive Statistics, Pearson's Correlation, Regression Analysis were used for analyzing the data.The result of this study reveals that, cash conversion cycle as a component of working capital management has a significant negative effect on profitability of listed companies in Sri Lanka. It concluded the listed companies in Sri Lanka have to decrease period of cash conversion cycle other than considering the current ratio and quick ratio to improve the company's profitability in the form of increasing its profit generation to enhanceshareholders wealth.

Liquidity management is one of the core functions of modern organisation. It deals with the management of liquidity in such a way that profitability should be maximized. Liquidity is concerned with the ability of firm to meet its short term obligations while profitability deals
with the ability of firm to earn profit. An effective liquidity management focuses on proper trade-off between liquidity and profitability. Oil and Natural Gas Corporation Limited (ONGC), a largest producer of crude Oil and natural Gas in India, has a Maharatna status, a most valuable Public Sector Enterprise Unit (PSU) with Rs. 4 trillion market capitalizations. It
has a fifth rank in Asia. The total Oil & Gas production of ONGC Group has been 59.21 MMToe during 2013-14. The liquidity position of ONGC is measured through liquidity ratios [CR, LR, WCTR, ITR, DTR and NWCTA] while profitability position of ONGC is measured through profitability ratios [NPR, OPR, ROTA, ROCE, ROI and EPS]. This paper is an attempt to study the impact of liquidity on ONGC profitability. To gauge such impact correlation and multiple regressions analysis has been used. The result reveals that liquidity has no impact on ONGC profitability.
Keywords: Liquidity Management, Profitability, Liquidity, Working Capital Management, Petroleum Industry, ONGC, Regression Analysis

Working capital management is important component of financial management. Usually it is found that short term management of capital is ignored, consequently leading to failure of businesses. Thus the study focus to make item wise analysis of each component of Gross Working capital for APGENCO using
percentages and examine the impact of Working capital on profitability by using statistical tool such as Correlation analysis for the study period of 2005 to 2010. In the analysis working capital ratios such as current ratio, Liquid ratio, working capital turnover ratio, Inventory turnover ratio, receivables turnover ratio, cash turnover ratio and Return on Investment ratio has been used. The study found that Debtor share a major proportion of gross working capital and cash balances has been ignored by the company. Further WTR and DTR showed a high degree of positive correlation and CR, LR, and ITR showed a high degree of negative
correlation between variables and profitability. Hence, the study of the impact of working capital ratios on profitability showed both negative and positive impact.

The management of firm's holdings of current or short-term assets such as cash, receivables, inventory and marketable securities is Working Capital Management. A well designed and implemented working capital helps in creation of firm's value. While conducting day to day operational activities a firm is required to maintain balance between its liquidity and profitability. To measure the financial performance the firm uses various indicators which help in reflecting financial health status of the corporation. A number of studies have been conducted in the field of Cement Industry and its Financial Performance Evaluation; as these industries play a significant role in economic development. But there are various issues and challenges in their trade practices and other related operational activities. With the help of various ratios like current ratio, liquid ratio, working capital turnover ratio, current assets turnover ratio, absolute liquidity ratio we try to find out working capital trend of ACC , its impact on profitability and its future prospects. Introduction: The company's policy of utilizing and monitoring the components of current assets and current liabilities in order to ensure efficient operation of the company is working capital management. It involves managing inventories, accounts receivable and payable and cash. Through this process the firm ensures that it has sufficient ability to satisfy both short term debts and upcoming operational expenses. Working capital management can have a significant impact on both the liquidity and profitability of the company. It is the integral component of the overall corporate strategy to create shareholder value. Smith (1980) first signalled the importance of the trade-offs between the dual goals of working capital management i.e. liquidity and profitability. Working capital is used to keep a business operating smoothly and meet all its financial obligations within the coming year.

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Working Capital Management is the process of planning and controlling the level and mix of current assets of the firm as well as financing these assets.

Working capital is the capital you require for the working i.e. functioning of your business in the short run.

The nature and scope of finance; Sources and uses of funds , functions of finance, financial objectives of firms, risk-return trade-off. Financial management: Financial analysis, planning and control, management of working capital, agency theory, Sources of funds; internal and external sources.

Working capital management is the discipline of management which is inevitable in all walks of economic life whether in a household or in an enterprise, in the public domain or in private domain,profit oriented or not .The efficient working capital management is most crucial factor in maintaining survival,liquidity,solvency and profitability of any business organization. Moreover, an optimal working capital management positively contributes to the firm's value. Theprofitability and the efficiency of every sector in the nation have direct bearing on the prosperity of economy which can be primarily achieved through efficient working capital management practices. It helps in designing a framework to smoothen the financial constraints of business so as to make effective use of its resources.Keeping in mind the significance of working capital management an attempt has been made to examine its impact on the profitability of Indian automobile industry. The Indian automobile industry is...

Financial value chain analysis is used to examine working capital management by cycle times in the value chain of the automotive industry during 2006-2008. The applied method offers a holistic view of the value chain from raw materials to the end customers. The average cash conversion cycle of the value chain of the automotive industry was 67 days. According to the study, the change of cycle times of working capital followed mainly the change of cycle time of inventories. The position of the stages of the value chain measured by the cash conversion cycle did not change substantially from

“Study on analysis of working capital management in fertilizers Corporation of India and Gujarat state Fertilizers Corporation”. The objectives of this study were to Measure Fund position of various fertilizer industries in Gujarat. From the research it was found that the analysis revealed that a he portion of funds was tied up as working capital especially in inventories and receivables .The study revealed that the sample companies failed to manage working capital efficiently by the usage of latest techniques and hence the funds were locked up at various levels during the course of business operations.

This paper is an empirical analysis of the impact of working capital management on financial performance of listed manufacturing firms in Nigeria for the period of seven years (2011 to 2016). The population consists of ninety onenbsp (91) listed manufacturing firms in Nigeria Stock Exchange and the paper used forty seven (47)as the sample size. The study aims to investigate whether working capital management (proxy cash conversion cycle and Inventory Turnover in Days,) have any significant contribution on firmrsquos financial performance. The study adopted Simple Regression Analysis technique and data were collected from secondary source through the audited annual reports and accounts of the firms. The findings reveal that working capital management influences firmrsquos performance. Therefore it recommended that the listed manufacturing firms should maintain a considerable number of days in managing the process of converting raw materials to finish goods and cash collection to impr...

Working-capital management is an important decision in financial management, playing a key role in a firm’s financial performance. For construction companies, working capital is all the more important due to the long project cycles they face.
The present study examines the impact of working capital on profitability in the construction sector in Bangalore, India. The data for the study were collected from a sample of five major builders based in Bangalore, and pertains to a study period during 2006-11. The study contributes to the literature by using fixed-effects-panel-regression analysis rather than pooled regression, as the fixed-effects panel regression allows control for company-specific differences in profitability as well as for year-to-year differences in profitability for the industry as a whole.
The results of the study suggest that construction companies should focus on two working-capital variables to maximize their profitability, viz. average collection period and accounts payable, both of which were found to have significant positive impact on profitability.

For a successful working of a business organization fixed and current assets play a vital role as organization generally invests in these options. An attempt has been made in this paper to study the working capital components and the effect of working capital management policies on profitability of 10
Infrastructure companies. The paper also tries to study the correlation between liquidity, profitability and Profit before Tax (PBT) of selected Infrastructure companies. The study is based on secondary data collected from annual reports of different Infrastructure companies and PROWESS (CMIE Database) for the period 2007 to 2012. In this paper there is an application of correlation and regression analysis to identify the significant effects of Working capital management on the profitability. The Management of operating capital is indispensable as it might induce a direct impact on profitability and liquidity.

Working capital is vital in any business, especially in SMMEs, given that most of their assets are in the form of current assets. Management of working capital is vital in order to improve profitability of the business. This study investigated the effect working capital management on profitability, using fifteen South African SMMEs, listed on the Alt-X on the JSE, from 2008-2012, using a multiple regression analysis. The results show a positive relationship between number of days account receivable, number of day’s inventory and negative relationship between number of days payable and cash convention cycle. Thus minimizing working capital and decreasing the cash conversion cycle increases profitability and hence shareholder value.

Title of the study: "The study of working capital management" As a part of curriculum, every student studying BBA has to undertake a project on a particular subject assigned to him/her. Accordingly we have been studied on working capital management in Bahety Chemicals & Minerals pvt ltd Dandeli.

The main thrust of this study is to unveil the working capital management practices of SSEs in the Central Region of Ghana. The study used descriptive statistics for the presentation and analysis of findings. The results show that 38 percent of SSEs received credit from their suppliers and the average credit period ranged between two weeks to one month. On the other hand, the credit period given by SSEs to their credit customers ranged between less than a month and 60 days. From the study, two main problems faced by SSEs in dealing with credit customers are late payment and bad debt. The results show that 50 percent of respondents use notebooks while only 0.7 percent uses computers for inventory control. Fifty-seven percent of the respondents had bank account for their businesses. Personal savings accounted for about 60 percent of start-up capital and SSEs consider inflation/price increases to be more problematic than even high debtors turnover period and low stock turnover. Consequently, it is recommended that there should be greater collaboration between the Business Advisory Centres (BACs) and the various associations of SSEs for the financial training of entrepreneurs. Government will have to expand the BACs currently located in only the district and regional capitals. The National Board for Small Scale Industries (NBSSI) should design and print more simplified record keeping documents, like their current cash book, for use by the SSEs. The SSEs should use their associations in a cooperative manner to procure inventory.

Executive Summary • Working capital (also known as net working capital) is a financial metric that measures a company's operating liquidity. • Working capital is defined as current assets minus current liabilities. A positive position means that a company is able to support its day-to-day operations-i.e., to serve both maturing short-term debt and upcoming operational expenses. •

The study has been conducted for gaining practical knowledge about working capital management &activities of Travancore Cochin Chemicals Ltd. Investment in fixed  asses only is not sufficient to run the business. working capital or investment in current assets, however small it is, is a must for purchase of raw materials, and for meeting the day to day expenditure on salaries, wages, rents, advertising etc., and for maintaining the fixed assets. Working capital is just like a heart of industry if it weak, the business cannot prosper and survive, although there is a large body of fixed assets.