1.1Background of the study
“Working capital is the lifeblood & nerve centre of a business firm”.Just as circulation of blood is essential in the human body for maintaining life, working capital is very essential to maintain the smooth running of a business. No business able to carry on day-to-day activities without the availability of adequate working capital.The term working capital refers to the amount of capital which is readily available to a company. That is, working capital is the difference between resources in cash or readily convertible into cash (Current Assets) and organizational commitments for which cash will soon be required (Current Liabilities).(Greg & Krueger,2003) Working capital management involves administering to both short-term assets and short-term liabilities in order to keep costs to a minimum and to control risks in companies.
Efficient management of working Capital is one of the pre-conditions for the success of an enterprise. Therefore, it is crucial for better handle on the whole working capital cycle, and the drivers behind it. . The individual components of working capital management are cash, receivables, payables, and inventory management – influence the WCM performance in different manners (Schilling, 1996). The proportions of these components in the working capital change from... [continues]
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