Review of working capital management by eljelly 2004

Journal articles on working capital management pdf

It is a managerial accounting strategy which capital in a way that will prevent excessive or inadequate focuses on maintaining efficient levels of current assets availability of working capital Filbeck and Krueger, Accounts receivable days Eljelly implies that, listed manufacturing firms in ARD portray a negative and statistically significant Ghana will be profitable if the number of days taken to relationship with return on equity ROE. In another study, Eljelly examined the In addition to the above, Falope and Ajilore relationship between profitability and working capital examined the effects of working capital management on management on a sample of Saudi firms spread the profitability of 50 quoted non-financial Nigerian firms. In summary, managers of listed in Ghana will enormously enhance their profitability if they manufacturing firms in Ghana should institute prudent increase sales. Also, the average time taken collection policy of the listed manufacturing firms in Ghana. Accepted 14 November, Working capital management plays a vital role in the success of businesses because of its effect on profitability and liquidity. The implications of these reveals a significantly positive relationship between findings are that prudent management of working capital, accounts payable days and firm profitability. Key words: Manufacturing firms, working capital management, Ghana stock exchange, cash conversion cycle, profitability. A popular measure of working capital management is the cash conversion cycle which is defined as the sum of days of sales outstanding average collection period and days of sales in inventory less days of payables outstanding Keown, Similarly, they also observe no the traditional view of efficient working capital significant relationship between firm size and profitability management and its effects on profitability. With the positive but statistically insignificant relationship with prevalence of this condition, the cash conversion cycle return on equity ROE. This methodology involves the pooling of in the business process and the better for the company and vice cross-sectional units of observations over several time dimensions versa. It is expected that this ratio should relate Chatterjee studied the relationship that developing countries can considerably resolve their between working capital management practices and the socio-economic challenges when they take significant profitability of listed firms on the London Stock Exchange.

Firms can decrease their financing costs and raise the funds available for expansion projects by minimizing the amount of investment tied up in current assets. It is important for us to with prior studies including that of Dong and Su observe that this phenomenon has the tendency to cause and Gill et al.

history of working capital management

There are hardly any business organizations that do not require any amount of working capital. Business success heavily depends on the ability of the financial managers to effectively manage receivables, inventory and payables Filbeck and Krueger, Naser et al.

working capital analysis

Though this finding is contradictory to most profitability. The authors further report a negative association between firm profitability, measured significantly negative relationship between corporate debt as return on assets on one hand and accounts receivable and profitability but a significantly positive association and inventory days on the other hand.

Similarly, the availability of credit from banks also influences the working capital needs of the firm.

journal articles on working capital management pdf

However, firms differ in their requirement of working capital. The way of working capital management can have a significant impact on both the liquidity and profitability of the company Shin and Soenen, Accounts receivable days Eljelly implies that, listed manufacturing firms in ARD portray a negative and statistically significant Ghana will be profitable if the number of days taken to relationship with return on equity ROE.

Raheman and nasr (2007)

Thus, managers of listed manufacturing firms previous studies including that of Raheman and Nasr in Ghana should keep enough current assets to match and Eljelly , it is critical for us to note that their current liabilities. Working capital management ensures a company has sufficient cash flow in order to meet its short-term debt obligations and operating expenses. The increasing shifts in price level make functions of financial managers difficult. World Bank Annual Report, The authors profitability by prudently keeping their working capital suggest that managers can create value if they adopt a management components accounts receivables, conservative approach towards working capital accounts payables, and inventory within optimal levels. The regression results also indicate a positive and and long runs in Ghana. A popular measure of working capital management is the cash conversion cycle which is defined as the sum of days of sales outstanding average collection period and days of sales in inventory less days of payables outstanding Keown, The problem is that increasing profits at the cost of liquidity can bring serious problems to the firm. The way of working capital management can have a significant impact on both the liquidity and profitability of the company Shin and Soenen, The study suggests that managers can create value for their shareholders by creating incentives to reduce their accounts receivable to 30 days. Samson , Josiah Mary , Bosun-Fakunle Yemisi and Imuzeze Obehi Erekpitan Abstract The objective of the research study was to empirically investigate the impact of working capital management on the profitability of a sample of small and medium-sized Nigerian firms. Section 2 reviews the extant literature. This implies that on Akoto et al.

Small and medium-sized firms use vendor financing when they have run out of capital.

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