The Impact of Working Capital Management on the Profitability of the Manufacturing Sector of KSA

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ACKNOWLEDGEMENT

My thanks go out to all who have helped me complete this study and with whom this project may have not been possible. In particular, my gratitude goes out to friends, facilitator and family for extensive and helpful comments on early drafts. I am also deeply indebted to the authors who have shared my interest and preceded me. Their works provided me with a host of information to learn from and build upon, also served as examples to emulate.

DECLARATION

I, (Your name), would like to declare that all contents included in this thesis/dissertation stand for my individual work without any aid, and this thesis/dissertation has not been submitted for any examination at academic as well as professional level previously. It is also representing my very own views and not essentially which are associated with university.

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ABSTRACT

Working Capital (WC) plays an important role in companies' profitability, risk, and value (Bhunia and Das 2012). “WC is the difference between current assets and current liabilities” (Collier, 2007). Properly managed working capital has a positive impact on the profitability of companies and helps them reach their strategic goals and maintain positive liquidity. On the other hand, over investment in working capital has a negative impact on companies' profitability (Chary, Kasturi, and Kumar 2011).

In this study, the impact of Working Capital Management (WCM) on firm profitability will be investigated. In particular, the research focuses on the case of Abdul Latif Jameel Co. Ltd. (ALJ), the largest independent distributer, worldwide, for Toyota vehicles in Saudi Arabia. Moreover; efficient financial management is required for survival, growth, and success of any company. Consequently, the Saudi auto industry, including ALJ, needs to consider that WCM as an integral part the overall financial and corporate management. The results of the questionnaire survey showed that their firm there is a strong relationship between inventory, cash, accounts receivable and accounts payables; its inventory is best managed independently of accounts receivable. Firm's inventory is not managed independently of accounts receivable and they cannot successfully operate their organization with zero or negative working capital. It is possible to rely only on the current liabilities for financing the total investment in the current assets of the business. The results of the regression analysis show that the working capital management has an effect on the profitability of the automobile companies in Saudi Arabia.

TABLE OF CONTENTS

ACKNOWLEDGEMENTII

DECLARATIONIII

ABSTRACTIV

CHAPTER 01: INTRODUCTION1

1.1 Background of the Study1

1.2 Automobile Sector in Kingdom of Saudi Arabia2

1.3 Aim and Objectives3

1.4 Research Questions4

1.5 Significance of the Study4

1.6 Layout of the Dissertation4

CHAPTER 02: LITERATURE REVIEW6

2.1 Introduction6

2.2 Working Capital6

2.3 Working Capital Management (WCM)6

2.4 Liquidity Management7

2.5 Debtors Management11

2.6 Debt Financing and Working Capital12

2.7 Policies on Working Capital Management12

2.8 Working Capital Management and Profitability15

2.9 Trends in Working Capital Management16

2.10 Summary18

CHAPTER 03 RESEARCH METHODOLOGY20

3.1 Introduction20

3.2 Research Method20

3.3 Overview of the Mixed Methods21

3.4 Research Instruments22

3.5 Sample Size24

3.6 Reliability25

3.9 Data Analysis26

3. 10 Triangulation27

3.11 Ethical Considerations27

3.12 Limitations of the Study27

3.12 Conclusion28

CHAPTER 04: DISCUSSION AND ANALYSIS29

4.1 Introduction29

4.2 Questionnaire ...