We examine the influence of strategic choice on working capital configurations and observe how the relationship between working capital ratio and operational performance differs depending on strategy by clustering the strategic factors of the wholesale and retail industry, we find three categories of strategies: terminal market strategy, middle market strategy, and hybrid strategy. The working capital requirements of a company depends on its terms of purchase and sales: if it makes a purchase on credit and sells on a cash basis, then it requires less working capital conversely, if it buy with cash and sells on credit, then it will need more working capital. Working capital management, which involves monitoring each component of working capital (gill 2011), as well as minimising deviations from the target level, is a complicated and time-consuming process (lamberson 1995, appuhami 2008, kim & srinivasan 1991. Factors determining working capital requirements the quantum of working capital is depending upon a large number of factors it is very difficult to pin point the factor which is highly responsible the degree of influence of each factor varies from time to time. Internal and external factors that affect working capital in any business, managing working capital is a never-ending task for the finance and accounting personnel a constant inflow of funds has to be ensured to keep the daily operations of the company motoring along smoothly.
Abstract the main purpose of this study is to explore factors that influence working capital management by non-financial companies listed on abu dhabi securities exchange. Operating cycle and cash cycle are two important components of working capital managementtogether they determine the efficiency of a firm regarding working capital management while theoperating cycle is the time period from inventory purchase until the receipt of cash, the cash cycle is the time period from when cash is paid out, to when cash is received. Verma et al (2009) observed for achieve the firms are focusing even more on effective financial management practices and are greatly concerned about core financial issues like capital structure, cost of capital, working capital management and capital budgeting. Overall the results indicate that investing in working capital processes and incorporating working capital efficiency into everyday routines is essential for corporate profitability as a result, firms should include working capital management in their financial planning processes.
The requirement of working capital depends on the nature of business the nature of business is usually of two types: manufacturing business and trading business in the case of manufacturing business it takes a lot of time in converting raw material into finished goods therefore, capital remains. Working capital management refers to a company’s managerial accounting strategy designed to monitor and utilize the two components of working capital, current assets and current liabilities, to ensure the most financially efficient operation of the company. Factors influencing investment decision capital investment decisions are not governed by one or two factors, because the investment problem is not simply one of replacing old equipment by a new one, but is concerned with replacing an existing process in a system with another process which makes the entire system more effective. Working capital is defined as being the capital of a business which is used in its day-to-day operations it is the net of current assets minus current liabilities working capital ensures whether. This study examined the influence of working capital management components on corporate profitability a sample of 30 firms listed on the nairobi stock exchange (nse) for the periods 1993 to 2008.
Analysis of the working capital policy and management (conceptual) synopsis 31 introduction 38 determinants of working capital requirement/factors influencing working capital requirements this chapter is related to conceptual analysis of working capital policy and management. Working capital management is the management of all aspects of both current assets and current liabilities, to minimise the risk of insolvency while maximising the return on assets the main objective of working capital management is to get the balance of current assets and current liabilities right. The influence factors of economic performance – variables the return on assets (roa) indicator expresses the company’s ability to generate profit as a consequence of the productive use of resources and of the efficient management, and it’s used as a. The relationship between working capital management and financial perfomance of private hospitals in kenya : mungai, john mwangi: demographic diversity in top management team, corporate voluntary disclosure, discretionary accounting choices and financial reporting quality in commercial state corporations in kenya factors influencing.
Factors affecting working capital 1 by, akhil raj p bims changanachery 2 working capital is that part of the capital which is needed for meeting day to day requirement of the business concern. Ii factors affecting working capital management practices in small and medium enterprise in nairobi by jean paul ndagijimana a research project report submitted to. The purpose of this study is to find the factors that influence the working capital requirements (wcr) in canada a sample of 166 canadian firms listed on toronto stock exchange for a period of 3. Working capital requirements and the determining factors in pakistan literature on corporate finance has traditionally focused on the study of long-term financial decisions.
Factors influencing working capital requirements there are a number of factors influencing the working capital requirements of a company these elements have a considerable extent of impact on the short-term performance of a firm. What are factors determining working capital requirements in business ans: the factors determining working capital needs of a business firm are as follows: 1 size of the firm: a large firm needs more working capital than a small firm. Working capital is as important to a business as blood is to a human being technically, this capital measurement represents your company's current assets minus its current liabilities. Cost of capital is an important concept in financial management various financing and investing decisions depend upon the cost of capital of a firm there are several factors that make cost of capital of a firm high or low demand and supply of capital affects the cost of capital if the demand.