Working Capital Management Literature Review

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1.0 Introduction This document is structured as follows: The Introduction section would be followed by the background of the study and statement of problem. Item three would provide the objective of the study. The research question and literature review sections would follow right after the statement of problem section. The methodology would present the details of the data collection methods used, selection criteria of the sample size and the statistical tools used for the data analysis. Items seven and eight would deal with significance of the study and scope and limitations respectively. Finally, the organization of the study is provided, followed by the references. 1.1. Background of the Study Working Capital Management (WCM) is one topic…show more content…
Current assets are assets which are easily converted into cash without diminishing their values and are likely to change their form within one accounting period. This comprises of inventory, receivables and cash. Current liabilities on the other hand are essentially bills and debt due suppliers and creditors within a short period of time. These are mostly referred to as accounts payables. Efficient working capital management (EWCM) includes planning and controlling of current liabilities and current assets in a way that avoids excessive investments in current assets and prevents working with few currents assets insufficient to fulfill the responsibilities. (Sen and Oruc, 2009). They went ahead to note that there is an optimum working capital level that strikes a balance between risk and efficiency. Moreover, a quest for such balance requires a constant monitoring of the elements forming working capital. The efficiency of the working capital of a business organization is measured using net working capital; which is the difference between the current assets and current liabilities. Moreover, a useful and comprehensive measure of working capital efficiency (WCE) is the Cash Conversion Cycle (CCC) (Gill et al.,2010). Many Researchers and Scholars have written extensively on…show more content…
There are no absolute benchmarks of what may be regarded as aggressive or otherwise, but these characterizations are useful for analyzing the ways in which individual companies approach the operational problem of working capital management. (Singh and Kumar, 2009). This study would attempt to identify the different working capital management policy adopted by different organizations in the downstream oil and gas industry in Ghana. The oil and gas industry in most economies is divided into three sections namely the upstream, midstream and downstream. The Oil and Gas industry in Ghana is predominantly made up the upstream and downstream. Prempeh, (2010) appears to be in agreement with this division when he noted that until the offshore discovery of crude oil in commercial quantities in July 2007, Ghana’s oil industry featured more prominently in the downstream
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