Working capital management at Stainless Steel Products LTD : a case study

Abstract

Working capital literature is rather limited and the process of managing short-term resources is not well understood by academics. In contrast, corporate managers are continuously involved in the working capital decision-making process, but their perspective is limited to the practice of their firm. Working capital has acquired great significance and a sound position for the dual objectives of profitability and liquidity. Firms are generally faced with the problem of inefficient utilisation of resources available to them. Capital is usually the scarcest productive resource and proper utilisation of these resources promotes the rate of growth, cuts down the cost of production and improves production efficiency. The importance of working capital and its provision can lead not only to material savings in the economical use of capital, but can also assist in furthering the ultimate aim of a business, primarily that of maximizing financial returns on the minimum amount of capital which needs to be employed. This study addresses the policies which are of crucial importance in achieving working capital objectives and indicates the need to improve financial planning models in relation to the production techniques in place. Further, the dissertation focuses on the working capital ratios of a local manufacturing firm with the scope of identifying trends and assisting in devising possible strategies for improving current working capital positions.