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[pic 1] the Impact of Working Capital Management on Profitability in Carlsberg Corporate, Diageo Company, Fraser and Neave(f&n) Company, and Starbuck Corporation in Malaysia

Autor:   •  October 17, 2018  •  13,673 Words (55 Pages)  •  417 Views

Page 1 of 55

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5.3: Implication of the study 69

5.4: Limitation of the Study 70

5.5: Recommendation for Future Research 70

5.6: Conclusion 71

Reference 72

APPENDIX A 76

APPENDIXB 78

APPENDIXC 86

APPENDIX D 102

APPENDIX E 106

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Chapter 1

1.1 Research Background

Recent collapse of the global financial crisis and the huge tissue is taken to the forefront of the capital markets, research and the importance of resource management of the organization, particularly working capital management. Working Capital described be used in accordance with the daily work and in accordance within industry, it can be a relatively high proportion of the total assets of the organization. Executives affects the financial performance of the company, there is a belief has been emphasized efficient use of resources of the company and this particular problem was a little empirical evidence (Matarneh, 2012).

Working Capital Management (WCM) is a financial strategy to focuses on maintaining an efficient level of a component between the fixed assets and fixed liabilities in each of the capital operating. The company has sufficient cash flow to meet the reliably work short-term debt and operating costs of the capital management. Working capital management is in order to achieve the optimum effect and find an efficient and effective way to the day-to-day operation. In connection of good working capital management is increased cash flow, this way connected with the much needed external funding and the basic probability of the company is reduced (Shah, 2016). Entity, it is necessary to optimize the fluidity and profitability while performing daily tasks. Working Capital Management (WCM) contains proportion balance of working capital components such as long term liabilities, current asset, and etc. The maximum benefit appropriate optimization is possible balance of working capital to minimize the working capital requirements. Working capital management (WCM) is important because it will affect profitability and increasing the risk of company (Smith, 2012).

In light of the above background, empirical research on the impact of Working Capital Management (WCM) on profitability of companies of particular industries in developed countries and developing countries, it can be seen that the relatively scarce. In order to fill in the missing that exist in the area of literature for, the most important thing is and have to identify the direction of the impact on the profitability of this cement company.

1.2 Problem Statement

The impact of working capital management of company of liquidity is a major that can influence on the profitability. For liquidity, impact of working capital management in the company is insufficient when it cannot pay its obligations. In addition, the company that without satisfactory the working capital would not be intelligent to give the products and services necessary for customers who are missing for which product the production material purchase cost. It can jeopardize profitable results of company (Matarneh, 2012).

On the other hand, Lambeson (2015) showed that working capital management is significant to handle the economic aspects of the firm. Many of the financial administrators are looking to recognize the significant of working capital management that it is possible to improve the profitability of their companies (Lambeson, 2015). It also find have negative issue that able to impact correlation between numbers of day’s inventories, number of days accounts receivable and cash conversion cycle (Shah, 2016). Besides that it also presented that there have positive relationship between number of day’s accounts payable with the corporate profitability (Lazaridis, et.al, 2012). There is no research to be performed on the impact of working capital management in the company profitability.

According to the Padachi (2015), 60% of surveyed companies have concluded that are suffering from the poor cash management (Padachi, 2015). Furthermore, Rafuse mention that UK Company existing is the main problem causes poor working capital management happen (Rafuse, 2013). Healthy companies with good potential position can generate strong cash flow in the future year but it still possible end up in order to pay the inability of their invoices. It will cause harder time or difficult situation to manage the supervision. Besides that, an international company is difficult time to manage their own internal communication business (Polak, 2011). If the flow is not flowing out match, it will create a mismatch of profitable assets and liabilities (Padachi, 2015).

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Table 1.1: Profitability Ratio of Guinness Nigeria and Consolidated Breweries

Year

Profitability Ratio

Guinness Nigeria

Consolidated Breweries

PBT Ratio

Net Profit Ratio

PBT Ratio

Net Profit Ratio

2011

0.21

0.14

0.15

0.11

2012

0.16

0.11

0.12

0.08

2013

0.13

0.09

0.05

0.03

Source: Annual report from year 2011 to 2013 of the company above.

For another example, the table 1.1 above shows the

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