Thesis On Finance On Working Capital Pragmatism And Education Essay
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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.
Therefore, firms need to identify the optimal level of working capital that can maximise firm’s value (Afza and Nazir, 2007).
According to Ganesan (2007), optimization of working capital means minimisation of related costs and maximisation of related income.
In other words working capital is the newlineamount of funds necessary to cover the cost of operating the enterprise.
Thus, WCM has enormous influence to firm’s performance.
Research Question – ‘Does the past evidence showing a relationship between WCM and profitability hold true in Malaysian Listed Companies -manufacturing and services industries.’ The aim of this study is to provide empirical evidence of the relationship between WCM and profitability in a sample of Malaysian listed companies by looking at the manufacturing and services industries.
The management of working capital is important in order to maintain its liquidity in day-to-day operation; to ensure it operation is running smoothly and meets its obligation (Eljelly, 2004).
A firm without sufficient cash flow will have difficulties to survive in the future as it will be unable to pay its obligations.
Finally give suggestions, for better working capital management in Sea Tex Limited.