Purpose

– The object of the research presented in this paper is to provide empirical

evidence on the effects of working capital management on the profitability of a
sample of small and medium‐sized Spanish firms.

Design/methodology/approach
– The authors have collected a panel of 8,872 small to medium‐sized enterprises
(SMEs) covering the period 1996‐2002. The authors tested the effects of working
capital management on SME profitability using the panel data methodology.

Findings
– The results, which are robust to the presence of endogeneity, demonstrate that
managers can create value by reducing their inventories and the number of days
for which their accounts are outstanding. Moreover, shortening the cash
conversion cycle also improves the firm's profitability.

1.2 AIM OF THE STUDY As the recession that followed the financial crises of 2008 might be coming to
an end, there are indications that a shift in attention regarding WCM and revenue growth is about to
take place. While the impacts of a financial crisis have been used to highlight the issue of shifting
attention between WCM and revenue growth, the recent financial crisis will not be of further
consideration in this thesis. Instead, the aim of this thesis is to investigate the effects that shifting
management attention has on the efficiency of the use of working capital and how companies
continually work with WCM. In order investigate the effects of shifting attention, this the study will
first examine whether or not a trade-off regarding WCM and revenue growth actually exist. CH 1.
Introduction 8 Secondly, since a trade-off imply an increased “cost of growth” the awareness about
the effects of shifting attention away from WCM will be investigated. Thirdly, the study will also
investigate how companies choose to manage the working capital in relation to revenue growth.
Thus, fully capture the picture of how WCM is perceived and handled by practitioners so that
conclusions can be drawn and contribute to the development of WCM practice.
OBJECTIVE OF STUDY
W
e have been given this topic because of following reason:1.

To know how the working is done in the real world.2.

To get the practical exposure.3.

To make contact with the corporate people.

4
.

W
hat are the sources of working capital finance in the company?
5.

To know whether there is any difference between company working and book standards

LIMITATION OF THE STUDY

1.

I
t was very difficult to get the appointment from the company.

2.

Confidential information they do not want to share.