The Role of Managing Flow of Working Capital on the Business Operations and Profitability

Purpose – The operations of an organization are conducted through various sources of funding. The current research aims at the proper management of Working Capital in a business so that negative impact can be minimized and profitability is maximized. The management of the flow of Working Capital brings stability to business operations and success. The paper provides effective understanding about the implication of working capital on a business. Research Methodology – The books and academic papers have been analyzed and reviewed to conduct secondary research so that potential information is gained on the research topic. The research majorly focuses on carrying out qualitative data through which relationship between working capital management and profits of the business is being analysed Findings – In the concept of financial management, Working Capital plays an imperative role in managing day to day activities effectively. Capital management by the financial manager is directly linked to the increased profitability of the business. The Working Capital structure of an organization can be enhanced through a reduction in the overall inventory period and the accounts receivables. Conclusion – The report provides an in-depth understanding of the positive and negative impacts of Working Capital management in a business. It is essential to depend on short term investment opportunities so that easy conversion of cash assures the necessary flow of capital. Highly liquid firms provide trade credits and easily eradicate the phase of the financial crisis.