Proposal on working capital management
Aim and goal of this study
The recent global financial crisis has resulted in a change in many of the traditional measures used to gauge the performance of the executive management of the company. The focus of academia has shifted from revenue and cost based studies to the importance of ensuring the survival of firms during a financial crisis. The study regarding the determinants of working capital management and the impact of working capital management on firm profitability have gained significance over the past few years. A substantial amount of research has identified determinants of working capital management that can be used for further studies on the subject; these include industry averages, the proportion of long-term assets held by the firm, the current assets, market share, type of business activity and the business environment prevailing at a particular time (Nwankwo and Osho, 2010). There is a scarcity of literature concerning the impact of working capital management on profitability for the listed companies in the United Kingdom. It is also seen that much of the literature has focused on macro-level studies without giving ample consideration to the differences that exist between different sectors in terms of working capital management. This research aims to conduct a most recent analysis of the working capital policies adopted by three different sectors in the UK. “The working capital management policies of firms in the retail, fashion and the pharmaceuticals sectors are unique to each other and the working capital management influences firm profitability in these sectors.” The statement of the problem highlights the focus of this research and provides the basis for the formulation of the appropriate research objectives. The study involves the selection of three unique sectors that are well represented on the FTSE 100 index and may exhibit unique working capital policies (Filbeck et al., 2007). The aims and...
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