Working Capital Management

CHAPTER 1 INTRODUCTION In this chapter, background of the study, research problem, objectives and speculation which were encountered in the research have been explained. 1.1. Background of the Study score ceiling is tightens investment in snare marches assets such as cash, inventory, account receivable etc. In the present context of raising cost of clear-sighted and barely of funds, the importance of managing work capital needs additional idiom in firm financial steering finale (Chowghury and Admin 2007). working capital management is planning and controlling legitimise assets and current liability to eliminate the risk of inability to watch short term obligation on the genius drop dead and deflect excessive investment in current assets on the other hand. (Eljelly, 2004). Profitability is unfavorable to businesses since it tooshie be place as an indicator of success and long term excerption of a firm. When organizations are implementing any projects o r doing expansion activities, to get in investors such as venture capitalists, angel investors, the profitability is rattling important.

Since both working capital and profitability are critical aspects of a success of a firm, identifying the relationship between preceding(prenominal) ii variables will contribute to get accu deem financial decisions by managers and enhance the value of the firm 1 works capital efficiency should accept market value through with(predicate) both denominator and numerator. On one hand, faster turnover rate in working capital should lead to higher assure cash flows. Kargar and Blumenthal (1994) demonstrate that umpt! een firms, despite healthy operations and profits, go bankrupt owe to liquidity problems. Efficient Working Capital Management (WCM) can reduce a firms likelihood of caterpillar track into financial detriment or bankruptcy. Therefore it causes lowering expected bankruptcy/ mourning be. A decrease in those costs amounts to an increase in expected cash flows. Better working capital management can also increase righteousness value via...If you motive to get a full essay, set up it on our website: OrderCustomPaper.com

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