Working Capital Management

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Working with
Working Capital Management

Multi-Line Industry
Conglomerates Family Firms
In GCC Countries

An efficient Working Capital Management (WCM) has a significant effect toward the creation of a firm’s value. It is a fact that financial managers in the firms used to give concentration on managing long-term financial decisions, specially capital structure, investment decisions, company valuation & dividends decisions. Only little attention was given to managing the short-term assets and liabilities, managers began to realize the importance of investigating those short-term assets and liabilities since the working capital management has an important role for the firm’s profitability & risk and the overall value
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The share of this industry was negligible, but after the huge efforts of the government, the share of Agriculture and Food Industry improved to 3.4% between 1984 and 1985 and rose to 7% in 1995.
Literature Review
Some earlier work by Gupta (1969) and Gupta & Huefner (1972) and some other researches studies the financial ratios as part of studying the working capital, but only few researchers studies the policies adopted by firms in managing their working capital.
In the year 1998, a research was conducted by Herbert J. Weinraub and Sue Vischer on the polices of a cross-section of ten different industries over ten years period. The results showed that industries do follow significantly different aggressive/conservative working capital policies, and they remain stable relative to each other over extended periods.
An interesting research by Nunnm Kenneth (1981) examined why firms use different levels of working capital. His paper dealt with the strategic determinants of working capital (cash, short-term securities, accounts receivables, and inventory) on a product line basis.
In a study conducted by Sathyamoorthi (2002), h focused on effective management of business assets and corporate governance, he concluded that emphasis was given to long term fixed assets whereas working capital has been given only very little attention. Analyzing some selected firms in Botswana between 1993 – 1997, his conclusion was that
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