Working capital management and profitability

Here, we reviewed the findings of other studies to the problem of working capital of different companies and economies. Long, M. It increases with the growth of the business.

Liquidity - Profitability Tradeoff: An empirical investigation in an emerging market. Temporary Working Capital Temporary Working Capital is also called as fluctuating or seasonal working capital.

working capital management articles 2017

The working capital ratio is always expressed as a percentage of total assets. They are of two types, current ratio and quick or acid test ratio. Over the recent years, and often for wrong reasons, Namibian SOEs have been constant media headlines.

Working capital profitability formula

One of the key objectives of debtor management is to mitigate potential loss resulting from bad debts Abuzayed, , and an effective creditor policy is a fundamental aspect in this regard. These aspects are measurable and consequently manageable. Volume of sales— This is the most important factor affecting the size and component of working capital. Demand of creditors— Creditors are interested in the security of loans. Financial Management, However, the problem is increasing profit at the expense of liquidity can bring serious trouble to the firm. The impact of working capital efficiency on profitability-an empirical analysis on Jordanian manufacturing firms.

Deloof, M. Profitability is the net result of a number of policies and decisions. Working capital management and profitability— Case of Pakistani firms. This emphasis is justified.

At a minimal level, scores ranging from 0. This suggests that reducing working capital investment is likely to lead to higher profits.

Dept of A.

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(DOC) An Overview of working capital management and profitability