DETERMINANTS OF WORKING CAPITAL MANAGEMENT THEORETICAL REVIEW

Anake, Fidel Atseye and UGWU, James Ike and Takon, Samuel Menyo (2015) DETERMINANTS OF WORKING CAPITAL MANAGEMENT THEORETICAL REVIEW. International Journal of Economics, Commerce and Management, lll (3). ISSN 2348 0386

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Abstract

Working capital management is determined endogenously by firm –specific variables such as size, age, profitability, market share (power), sales growth, operating risk and operating cash flow. On the other hand, it is determined exogenously by macroeconomic factors such as GDP, interest rate and tax rate. The ultimate goal of working capital management is to achieve an optimal level of liquidity and profitability contingent upon availability of cash, inventory and other current assets. Optimal level of working capital maximizes the firm’s value, hence a trade-off between liquidity and profitability. A manager who invests heavily on working capital decreases the firm’s profitability and imposes opportunity cost of funds. In the light of the foregoing, the paper attempts a discourse on the determinants of working capital management. To achieve this onerous task, we identify and analyze opinions, comments, suggestions and conclusions of various researchers and scholars alike in this critical area of corporate financial management.

Item Type: Article
Subjects: H Social Sciences > H Social Sciences (General)
Divisions: Faculty of Management and Social Sciences
Depositing User: mrs chioma hannah
Date Deposited: 29 Apr 2019 08:31
Last Modified: 29 Apr 2019 08:31
URI: http://eprints.gouni.edu.ng/id/eprint/1360

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