Positive Impacts Of Working Capital Management

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CHAPTER I
INTRODUCTION
TITLE OF THE STUDY
The working capital management has the great impact of the company’s performance. To check the working capital management affects a large amount of persons done the research on this in different companies sectors in different countries and in different environment along with different time period. Many persons find the positive relationship between working capital management and companies’ performance and many persons and researchers find the negative relationship between both, and some researchers find either impact negative and positive impact or working capital on company’s performance.
I.e. Mobeen Ur Rehman and Naveed Anjum take a sample consists of 10 cement companies listed in KSE of Pakistan
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current assets which is known as funds also employed to the business process from the gross working capital Current asset comprises cash receivables, inventories, marketable securities held as short term investment and other items nearer to cash or equivalent to cash. Working capital comes into business operation when actual operation takes place generally the requirement of quantum of working capital is determined by the level of production which depends upon the management attitude towards risk and the factors which influence the amount of cash, inventories, receivables and other current assets required to support given volume of production.
Working capital management as usually concerned with administration of the current assets as well as current liabilities. The area includes the requirement of funds from various resources and to utilize them in all result oriented manner. It can be stated without exaggeration that effective working capital management is the short requirement of long term
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A small firm has more investment in current assets than fixed assets and therefore current assets should be efficiently managed.
The working capital needs increase as the firm grows. As sales grow, the firm needs to invest more in debtors and inventories. The finance manager should be aware of such needs and finance them quickly.
3.9.3 PERMANENT/ FIXED WORKING CAPITAL Permanent or fixed working capital is minimum amount which is required to ensure effective utilization of fixed facilities and for maintaining the circulation of current assets. Every firm has to maintain a minimum level of raw material, work- in-process, finished goods and cash balance. This minimum level of current assets is called permanent or fixed working capital as this part of working is permanently blocked in current assets. As the business grow the requirements of working capital also increases due to increase in current assets.
3.9.3.1 INITIAL WORKING CAPITAL
At its inception and during the formative period of its operations a company must have enough cash fund to meet its obligations. The need for initial working capital is for every company to consolidate its

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