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THE EFFECT OF WORKING CAPITAL MANAGEMENT

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dc.contributor.author OSEI TUFFOUR, DAVID
dc.contributor.author BOAKYE APPIAGYEI, ANTHONY
dc.contributor.author ACHIAA GYASI, JULIET
dc.contributor.author ANOKYE, ELIZABETH
dc.contributor.author ASANTE, ROSEMARY
dc.date.accessioned 2012-11-20T17:32:31Z
dc.date.available 2012-11-20T17:32:31Z
dc.date.issued 2012-11-20
dc.identifier.uri http://hdl.handle.net/123456789/32
dc.description Historically, working capital management has passed through different stages, mainly – the control, optimization and value measurement. Working capital management originally started as a systematic approach of controlling the incoming, outgoing and remaining balances of cash, receivables and inventories. At this stage the main objective is that working capital is not misappropriated for personal benefits of those who are entrusted with its management. To this end both researchers and practitioners developed various control measures over the receipts and collections of cash, receipts and issuance of inventories as well as the increase of receivables through credit sales and decrease of receivables through cash collection. Under the optimality management phase, the main focus was not only on the physical safety of working capital items but also on the minimization of related costs and maximization of related income. Under the control and optimality approaches the amount of accounting profit is taken as a main measure of managerial efficiency. Under the value measurement approach working capital management concentrated on how to help managers in the creation and measurement of value without disregarding the above two objectives. Particularly, the cash flows approach is used as a main tool to measure the value created by firms. The control, optimality and value measurement approaches more or less concentrate on the internal management of working capital. In our study, we introduce a new dimension to these approaches – the external management of working capital. We argue that to have a maximum impact on value, firms should manage working capital in co-operation with their backward linkages (suppliers) and forward linkages (customers). By doing so firms can internally minimise the costs of the levels of working capital investment and short-term financing and externally minimise the costs of inter-firm transactional relations and thereby create more value. en_US
dc.description.abstract The main thrust of this study is to unveil the working capital management practices of Small and Medium Enterprises (SMEs) in the Ashanti Region of Ghana. The study used descriptive statistics for the presentation and analysis of findings. The results show that 16 percent of SMEs receive credits from their suppliers and the average credit period range between two weeks to one month. On the other hand, the credit period given by SMEs to their credit customers range is less than months. From the study, two main problems faced by SMEs in dealing with credit customers are late payment and bad debt. The results show that 50 percent of respondents use note books while only 0.7 percent uses computers for inventory control. Fifty-seven (57) percent of the respondents had bank account for their businesses. Personal savings accounted for about 38 percent of start-up capital and SMEs consider inflation/price increases to be more problematic than even higher debtors turnover period and low stock turnover. Consequently, it is recommended that there should greater collaboration between the Business Advisory Centres (BACs) and the various associations of SMEs for the financial training of entrepreneurs. Government will have to expand the BACs currently located in only the district and regional capitals. The National Board for Small Scale Industries (NBSSI) should design and print more simplified record keeping document, like their current cash book, for use by the SMEs. The SMEs should use their association in a co-operative manner to procure inventory. Key words: Working capital management, inventory, cash, accounts receivable, Accounts payable, Ashanti region, Ghana. en_US
dc.subject WORKING en_US
dc.subject CAPITAL MANAGEMENT en_US
dc.subject SMALL AND MEDIUM ENTERPRISES en_US
dc.title THE EFFECT OF WORKING CAPITAL MANAGEMENT en_US
dc.title.alternative A CASE STUDY OF SMALL AND MEDIUM ENTERPRISES IN KUMASI en_US
dc.type Thesis en_US


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