“the Effectiveness of Working Capital Management in a Private Pharmaceutical Company in Ghana”.

Q1

Select a topic of your interest and provide background information leading the formulation of the problem and the research questions, objectives and the hypothesis if any.

RESEARCH TOPIC

“The effectiveness of working capital management in a private pharmaceutical company in Ghana”.

INTRODUCTION

Working capital is the life blood of every business. It is for this reason that its management becomes very crucial if the sustainability of a business is to be ensured. The survival of a business depends on its ability to meet its short-term obligations as and when they fall due as well as its ability to pay its daily operating expenses. Working capital management comprises the management of the various constituent elements of working capital. Thus, the proper management of current assets such as cash, trade receivables, inventories, prepayments as well as current liabilities like trade payables and other short-term obligations of the firm, connote sound working capital management

BACKGROUND OF THE STUDY

Working capital refers to that part of the firm’s capital which is required for financing short term or current assets such as cash, marketable securities, debtors and inventories. Thus, funds invested in assets that keep revolving and can be easily converted into cash and other short-term assets in the ordinary course of business constitute working capital of the business. Hence, it is also known as revolving capital or circulating capital or short-term capital.

According to Genesten Berg, “ circulating capital means current assets of a company that are changed in the ordinary course of a business from one form to another, for example, from cash to inventories, inventories to receivables, receivables into cash”. Working capital, in general sense, refers to the excess of current assets over current liabilities. Management of working capital therefore, with the problems that arise in attempt to manage the current assets, current liabilities and the...