Working capital management of selected companies in the retail industry

Abstract

Purpose: This study emphasises the importance of proper working capital management in one of the largest Maltese industries. Furthermore, this study identifies the impact of the COVID-19 pandemic on retail entities’ management of cash, inventory, trade receivables and trade payables. Design: A review of the literature was carried out. Primary data was then gathered through qualitative semi-structured interviews with a number of representatives from a sample of entities in the Maltese retail industry. Findings: This study shows that Maltese retail entities are quite knowledgeable on working capital management and its objectives. This can be seen through the several policies that these entities have in place which enable them to manage cash, inventory, trade receivables and trade payables. From this study, it was found that the COVID-19 pandemic has definitely left its mark on the entities’ policies with regards to managing working capital and its components. Conclusion: Although most Maltese retail entities do realise the importance and the benefits of proper management of working capital, more work needs to be done. New policies can be introduced, and existing policies can be strengthened in order to obtain the maximum benefit from proper management of working capital. Value: This study identifies the reasons why Maltese retail entities manage their working capital, and how it is managed through policies. It also assesses the impact that the COVID-19 pandemic had on the working capital management of retail entities which can certainly act as an eye-opener in preparation of possible future similar uncertain events in the retail and other industries as well.