This research work is mainly based on secondary data and this is helpful to measure the relationship between working capital management and profitability of organization on basis of few years data and for the research ratio analysis is most important tool to identify the profitability and how it affected by the working capital management. This research will helpful to identify this relationship in other organization for taking as base.
The management of working capital is very important to businesses of all sizes (Padachi, 2006).Thus, the purpose of this study is to examine the effect of working capital management policies on firms profitability. To investigate this issue, the researcher used audited financial statements of a sample of 22 manufacturing private limited companies in Addis Ababa, for the study period of 2006 to 2010. EViews 6 was used to undertake both correlation and regression analysis of cross-sectional and time series data. The results from the study show that, longer accounts receivable period and inventory holding periods are associated with lower profitability. A weak and negative relationship also exhibited between accounts payable period and profitability measures. A significant negative relationship between cash conversion cycle and profitability measures also recognized. In addition, findings show a significant positive relationship between current liabilities to total assets ratio and profitability. Managers, therefore, can increase firms’ profitability by improving the efficiency of management of working capital investment and financing policies
Working capital is the life-blood for any organization. Even profit making firms cannot survive without proper management of working capital. The present study attempts to examine empirically the relationship between profitability and working capital management for NSE listed firms of Indian Steel and Pharmaceutical Industries. A number of ratios belonging to liquidity, turnover and asset structure are used as proxies for working capital management and return on total assets as a proxy for the profitability in the study. The study endorses the significance of working capital management. It demonstrates the crucial influence of working capital management on the profitability of the two Indian industries. Correlation analysis revealed that the profitability of Indian Pharmaceutical Industry is significantly associated with operational efficiency, receivables’ management and payables’ management.
Working capital management optimization has been placed high among the series of corporate objectives that firms seek to achieve in recent times. This is because they are faced with challenges which include; shortage of working capital to support business expansion, inventory management practices that are not effective enough to customer service requirements, sub-optimal inventory ownership which poses financial strains on the firms. All these coupled with macroeconomic instability have made companies to seek the best working capital management techniques that will improve their corporate financial performance. This book shed more light on how working capital management has affected firm’s performance and lessons to be learned.
The first and formost purpose of this book is to show the effect of working capital management on firms'' profitability. It shows the impacts of both working capital investment and financing decisions on firms'' profitability. So far, various studies show that, working capital management affects firms'' profitability but most of these studies were conducted in western developed economies. Thus, this book detailed and shed light on the effect of working capital management policies on firms'' profitability in case developing countries.
The working capital management plays an important role for success or failure of firm in business because of its effect on firm’s profitability as well on liquidity. The working capital management refers to the management of working capital, or precisely to the management of current assets. A firm’s working capital consists of its investments in current assets, which includes short-term assets—cash and, inventories, receivable and marketable securities. Therefore, the working capital management refers to the management of the levels of all these individual current assets. The universe of the study is textile industry of Pakistan, which is one of the oldest and the fast developing industry in the large scale sector of Pakistan. The study is based on secondary data collected from listed firms in Karachi stock exchange for the period of 2001-2006 with an attempt to investigate the relationship existing between profitability, and working capital management components for listed firms in Karachi stock exchange. The reason for restricting to this particular time period is that the latest and updated data for investigation is available for this period.
Different literatures were assessed for manufacturing business, small and medium sized enterprises, corporate organizations and factories to identify the impact of working capital management on the profitability; but there are no literatures on how working capital management affects the profitability of cooperatives. Therefore, this book was conducted to assess the impact of working capital management on the profitability of cooperative unions. A panel data using Random Effect Multiple Regression model is used to analyze the standard determinants of working capital. The GLS estimator was used as efficient estimator than Pooled OLS as per Breusch Pagan Test. To determine the most relevant impact of WCM on profitability of the unions based on a sequential regression approach with two alternative specifications of model were employed. The analysis should help to make decisions in business organizations and should be especially useful for professionals in Cooperatives Accounting and Auditing, Cooperative Business Management, Accounting & Finance, Business management or any else who wants to make a decision about WCM.
The pharmaceutical industry is one of the success stories of India ensuring that good quality essential drugs are made available at affordable prices to the vast population of the country as well as competing with some of the best names in the global markets. The industry is an intellectual industry and is in the front rank of India's science-based industries with investment in research and development and wide ranging capabilities in the complex field of drug manufacture and technology.owned, leadership passes from father to son and the founding family holds a majority share. In terms of the global market, India currently holds a modest 1-2% share, but it has been growing at approximately 10% per year. It is now seeking to become a major player in outsourced clinical research as well as contract manufacturing and research. There are 74 U.S. FDA-approved manufacturing facilities in India, more than in any other country outside the U.S, and in 2005, almost 20% of all Abbreviated New Drug Applications (ANDA) to the FDA are expected to be filed by Indian Companies.
This book aims to explore the impact of components of working capital management on profitability of Indian FMCG firms for ten years period from 2000-01 to 2009-10. Working capital management is considered to be a vital issue in financial management decision and it affects both liquidity and profitability of the firm. Apart from using Pearson’s and Spearman’s correlation analysis, panel data regression analysis like pooled OLS model and fixed effect LSDV model are employed in the study. Like previous authors, our study results reveal a sturdy negative association between working capital management variables and firms’ profitability. The results of our study also indicate the better explanatory power of fixed effect LSDV model than that of pooled OLS model.
Working capital is the life blood and nerve center of any business. No business can run successfully without adequate working capital. Hence working capital management is very important of corporate finance because it directly affects the liquidity and profitability of the firm. An efficient working capital management (WCM) has a significant effect towards the creation of firm’s value. It is a fact that financial managers in the firm used to give concentration on managing long term financial decisions, specially Capital structure and Investment Decisions, company valuation and Dividend decisions. Only little attention was given for managing the short term assets and liabilities, managers began to realize the importance of investigating those short term assets and liabilities since the working capital management has an important role for the firm’s profitability and risk and overall value of the firm.
The term working capital is defined as a firm’s total investment in current assets. Some defined it as firm’s current asset minus current liabilities. The capital required for the day to day operations of the business is called working capital. Working capital management is an integral component of the overall corporate strategy to create shareholder value (Abor 2004).Working capital management deals with current assets and current liabilities (Nasr and Rehaman2007). Eljelly (2004) defines that working capital management involves planning and controlling current assets and liabilities to meet the short term obligation without any delay. Efficiency of working capital management is a serious issue especially to manufacturing firms whose assets are mostly composed of current assets(Horne and Wachowitz,1998). There are many ways to improve the profitability of companies; working capital management is one of the important tools in the hand of financial manager to increase the profitability. Corporate sectors in foreign countries shows there is greater link between working capital management and profitability. By increasing or decreasing the working capital, corporate sectors have influe
Today’s unpredictable economic conditions pose great challenges for firms that intend to: grow, make increased profits, have healthier financial condition, and to reduce any possible risks. Funds in working capital may be utilized to address these concerns. The present research study makes an endeavor to examine relationship between working capital management policies and profitability. According to results, industrial sectors are following, significantly, different approaches to manage their working capital. All sectors illustrated that a conservative working capital investment policy generate positive returns except for one sector. Moreover, adopting an aggressive financing policy leads to higher earnings in four sectors and three sectors depicted opposite results. Present study may contribute towards the existing finance literature and current study may help the financial managers and policy makers to enhance their return on assets and equity by managing a suitable working capital investment and financing policy.
Working capital management plays an important role in any manufacturing company. One of the most significant areas in the day-to-day management of a company deals with working capital decision. Of all the financial decisions working capital decision is the vital one. It has been generally accepted that the profitability of a business firm depends to an enormous extent on the approach in which its working capital is controlled. Again, the sources of financing working capital play a very important role in maintaining liquidity and profitability of the firm. This study has emphasized mainly on the working capital planning and control practices in corporate firms of Bangladesh. This research work will help to find out the causes of poor working capital planning and control and contribute to the development of effective and pragmatic working capital planning and control for the better performance of the manufacturing industry. The findings and policy implication of this research work will be helpful to the planners and policy makers of the manufacturing industry in making and implementing working capital plans for the development of the industry.
Is Working Capital Management carried out in the same manner in all countries? How is Working Capital managed in the Netherlands? Does each industry differ in the way Working Capital is managed? The Effects of Working Capital Management on the Profitability of Dutch Listed Firms is a book in which research is conducted in the Netherlands with regards to these questions. This book also includes findings of other researchers in different countries.
Working Capital is the life blood of every business entity a firm is required to maintain a balance between liquidity and profitability while conducting its day to day operations. Liquidity is a condition to ensure that firms are able to meet its short-term obligations and its continued flow can be guaranteed from a profitable venture. To be effective working capital requires a clear specification of the objective to be achieved. Little attention has been paid to working capital management, despite the fact that many companies see such activities at the core of their profitability. This Research examines the implications of a corporation’s working capital management in Ghana Post Company Limited.