Analysis of working capital management at a local ceramic manufacturing company : a case study

Abstract

Efficient management of working capital is extremely important to any organisation because of its effects on the firm's profitability and risk and consequently its value. However very often, small businesses tend to overlook this type of financing, not realizing its impact on long-term growth and even corporate survival. The ideal level of working capital is difficult to calculate and will vary from one organisation to another depending upon the industry in which it operates. What is essential is that a business avoids both the situation of too little or too much working capital. The dissertation was conducted with the aim of evaluating and analyzing the individual components of working capital in a local manufacturing company concerned with the production of custom-made ceramics. Further, the dissertation focuses on the Company's working capital ratios, with the aim of identifying trends and assisting in devising possible strategies for improving current working capital position.