RESEARCH PROPOSAL

Working Capital Management and the Profitability of UK Companies

Table of Contents

Introduction3

Aims & Objective3

Literature Review4

Research Background4

Review of similar studies5

Proposed research method7

Working capital analyses7

Correlation analysis8

Regression Analysis9

Limitations of chosen method9

Sources of information9

Conclusion10

The concept of the management of working capital management is a vital element relating to the corporate financial management as it significantly affects the returns of an organisation. The proposed research will principally examine and establish an affiliation between Management of working capital and returns of organizations operating in the United Kingdom by using appropriate models and by adopting a sufficient and appropriate research methodology.References10

References11

Working Capital Management and the Profitability of UK Companies

Introduction

The research proposal will examine and analyze the relationship between an organisation's profitability and their working capital management. The concept of the management of working capital management is a vital element relating to the corporate financial management as it significantly affects the returns of an organisation.

Working capital management is described as the effective and efficient management of the current liabilities and current assets of an organisation.

Recent Researches have regarded and examined the concept of working capital management in several ways. It has been considered as the effective management of inventories, while others have regarded it as the establishment of an optimal policy for a firms accounts receivables, which leads to profit maximization.

Aims & Objective

The problem statement that will be examined in the research study is

“Does Working Capital Management Affect Profitability of organisations”

In order to critically examine this problem statement the main aims and objectives that needs to be achieved are

To principally examine and establish an affiliation between Management of working capital and returns of organizations operating in the United Kingdom.

To critically examine the impact of different components of working capital management on the profitability of organizations.

To institute an affiliation and relationship between profitability and components of liquidity.

To critically examine multiple correlation coefficient and multiple regression equation with the impact of financial ratios relating to working capital management and profitability.

To determine the optimal working capital requirements for an organization and examine its effects on sensitivity of return on investment (ROI).

To determine the consequence of the capital structure on the profitability of an organizations.

Literature Review

Research Background

Conventionally the concept of corporate finance engages the process of decision making in three major business areas which are working capital management, organisational budgeting and capital structure.

The concept of working management of the working capital in the finance literature attracts less attention than the two other concepts, as they involve the process of long term strategic decision making whereas, the working capital management is operational in nature as it involves management t of day to day resources (Chiou, Cheng and Wu, 2006:149).

Review of similar studies

Many researchers have examined the impact of working capital management on profitability in many ways. Following are some of the articles which can be useful and important for my research.

Deloof discussed the impact on profitability of the cash invested in Working capital of an organisation. It also discussed the optimal ways in which working ...