Investigate whether the two industries have the same effect on the relations.Extensive empirical research on WCM has been carried out around the world widely and those researches had given different results on the relationship between WCM and profitability.Tags: Essay Writing JobsBest Custom Essay Writing ServiceLinking Words For Essay WritingAppendix E ThesisNursing Personal Statements For ApplicationsTopic Sentence For Research PaperShould I Use Etc In An EssayMacbeth Tragic Hero Essay ConclusionStrategy Plans For BusinessHow To Write An Analysis Essay On A Short Story
The management needs to concern on account receivables, account payables, inventories and cash, as altering one component will affect the others.
Therefore, firms need to identify the optimal level of working capital that can maximise firm’s value (Afza and Nazir, 2007).
A firm without sufficient cash flow will have difficulties to survive in the future as it will be unable to pay its obligations.
Therefore, if a firm does not manage their liquidity position well, it will affect firm’s growth, survival and profitability (Shafii, 2010).
According to Ganesan (2007), optimization of working capital means minimisation of related costs and maximisation of related income.
Efficient WCM will increase firms’ free cash flow, which in turn increases the firms’ growth opportunities and return to shareholders.Consequently, efficient WCM is crucial in order to maintaining firms’ survival, liquidity, solvency and profitability.Thus, WCM has enormous influence to firm’s performance.Working capital management is an integral part of overall financial management.The sphere of working capital throws a welcome challenge and opportunity to a financial manager.The term working capital refers to short term funds required for financing the duration of the operating cycle in a business often known as “Accounting year”.These funds are used for carrying out the routine or regular business operations consisting of purchase of raw materials, payment of direct and indirect expenses, carrying out of production, investment in stocks and stores and amount to be maintained in the form of cash.As the studies on the data undertake from Ernst & Young, 2010 reveals that WCM vary across different industries.The study also gives significant evidence that different firms or sectors adopt different approaches to WCM.The study of working capital management occupies an important place in financial management.It has never received so much attention as in recent years.