Working capital has been touted as the lifeblood of every firm as it strongly facilitates the daily transactional activities of the firm and extensively, determined further capital investments and firm valuation. However, it is known to be an important cog in the wheel of a company.The aim of the thesis is, therefore, to examine the relationship and the impact of working capital management and organizational performance of 26 nonfinancial firms listed in the Ghana Stock Exchange in the period 2014 and 2015. The independent variables were the working capital variables which include Average collection period, Average payment period, Cash Conversion Cycle, Inventory turnover in days and control variables such as financial leverage, size of the firm and economic growth. Net operating profit was used as the dependent variable in the model. The descriptive analysis, Pearson correlation, and multiple regression models were applied to interpret the results of data. Results of correlation analysis show that Average collection period, size,inventory turnover in days, Cash conversion cycle and financial leverage showed a positive relationship on Net operating profit for 2015 apart from average payment and GDP growth which were negative in the same year. However, inventory turnover in days, average payment period and average collection period were the only variables with the negative relationship on the performance proxy in 2014. Results of regression analysis further revealed that the independent variables might significantly explain the variations in the dependent variable at 1% level of significance with variables like size, average payment period, financial leverage and GDP all showing a significant impact on the dependent variable, since the study revealed that working capital management could either have a negative or positive relationship with firm’s performance. Thus, it is suggested that managers can create value for their investor by slashing the number of days of average collection period and inventories to a reasonable minimum and also firms should conduct a thorough evaluation of their trends of performances by employing different components of working capital variables in the analysis.More organizations and years should be considered to analyze the general overview of the effects of working capital on profitability
| Identifer | oai:union.ndltd.org:nusl.cz/oai:invenio.nusl.cz:429560 |
| Date | January 2018 |
| Creators | Mensah, Stephen Owusu |
| Source Sets | Czech ETDs |
| Language | English |
| Detected Language | English |
| Type | info:eu-repo/semantics/masterThesis |
| Rights | info:eu-repo/semantics/restrictedAccess |
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