Working Capital Management

In: Business and Management

Submitted By kika
Words 329
Pages 2
An Empirical Analysis of Corporate Survival and Growth: Evidence from Efficient Working Capital Management

• A lot of corporate organizations could not live to achieve their objectives due to inefficiency in the management of its working capital. Every organization, both private and public needs sufficient working capital to enable it meet up with its daily basic financial obligations.
• The objectives of this research work are: to examine efficient working capital management as a prerequisite to corporate survival and growth; to find out what makes up working capital and if possible the best combination; and to suggest some measures for improvement in working capital management.
• Efficient working capital management involves themix of the current assets, current liabilities and fixed assets of the business in order to meet up with the day to day need of the business in question or in order words to keep the business going with less waste especially in terms of time, energy and goodwill. Nwankwo (2005) .
• efficient working capital is based on the decision of themanagement of the company in determining the volume of current assets over current liabilities that the company is prepared to have in the company’s balance sheet. Ibenta (2005, p. 406)
Working Capital Theories and Implications
There are basically three theories of working capital, which includes the conservative approach, the aggressive approach and the moderate approach (Nwankwo,
2005).
- The Conservative Approach: In this approach permanent capital is being used to finance all permanent assets requirements and also to meet some or all of the seasonal demands.
- The Aggressive Approach: In this approach, the company finances all of its fixed assets with long term capital but part of its permanent current assets with short-term credit (Van Horne, 1980).
- The Moderate Approach: This…...

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