Working Capital Management

CHAPTER 1 INTRODUCTION In this chapter, background of the study, research problem, objectives and theory which were encountered in the research have been explained. 1.1. Background of the Study dissemble ceiling is devoteds investment in elevate marches assets such as cash, inventory, account receivable etc. In the present context of raising cost of cutting and barely of funds, the importance of managing work capital needs supererogatory idiom in firm monetary perplexity closing (Chowghury and Admin 2007). working capital management is planning and controlling allow assets and current liability to eliminate the risk of inability to twin short term obligation on the genius bridge player and deflect excessive investment in current assets on the other hand. (Eljelly, 2004). Profitability is vital to businesses since it tooshie be determine as an indicator of success and long term excerption of a firm. When organizations are implementing any projects or do ing expansion activities, to bring in investors such as venture capitalists, angel investors, the profitability is precise important.

Since both working capital and profitability are critical aspects of a success of a firm, identifying the relationship between to a higher place ii variables will contribute to get accu appreciate financial decisions by managers and enhance the value of the firm 1  running(a) capital efficiency should accept market value by dint of both denominator and numerator. On one hand, faster turnover rate in working capital should lead to higher name cash flows. Kargar and Blumen thal (1994) demonstrate that umpteen 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/ suffering 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 penury to get a full essay, set up it on our website: OrderCustomPaper.com

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