The Effects of Working Capital Management on the Financial Performance of Trading Companies
European Journal of Molecular & Clinical Medicine,
2023, Volume 10, Issue 2, Pages 720-724
AbstractThe efficiency with which a business manages its working capital determines how well it can fulfil its operating expenses and its short-term debt obligations. It is important for businesses to balance the demands of effective working capital management with their overall financial and operational health. It is anticipated that the strong financial performance will be supported by an effective Working Capital Management. This research set out to learn how effective management of a company's working capital can boost its bottom line. Working capital management effectiveness was studied by analysing the cash conversion cycle. Here, we ask, "To what extent does the management of working capital affect the financial results of trading firms?" ― Working capital management is found to have a significant impact on bottom line results, according to the literature. The assumption was that a company's bottom line would benefit from better attention to its working capital. The relationship between the key performance indicator return on assets and the controllable factor of working capital management was studied.
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