Working Capital Management and Firm Performance

Topics: Accounts receivable, Management, Cash conversion cycle Pages: 3 (652 words) Published: July 1, 2011
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Paper 4 - Working Capital Management and Firm Performance
Working Capital Management and Firm Performance: An Analysis of Ghanaian Oil Marketing Firms Solomon Kwasi Kyei
University of Ghana Business School
Purpose: Businesses face ever increasing pressure on costs and growing financing requirements as a result of intensified competition in globalised markets. Many of them therefore consider ways of making themselves more efficient. In identifying possible options it is easier to focus exclusively on income and expense items with no consideration on the balance sheet items. However, improvements to the existing capital structure can free up valuable resources and bring increased efficiency. The study was an attempt to measure and analyze the trends in working capital management of Ghanaian oil marketing firms and its impact on their performance. This is very crucial because of the purported high profitable levels of the sector and likely under-utilization of such profit potential. In such a sector, there is also high possibility of over-trading which still under-utilizes the profit potential of the sector. Design/Methodology: The study employed trend and econometric analyses using an unbalanced panel data of 11 Ghanaian oil marketing firms form 2001 to 2008. For the econometric analysis, the study adopted the number of days inventory, number of day accounts receivable, number of days accounts...
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