Working Capital Management: The Case of Listed Retail Domestic Companies in Botswana
Article Details
Pub. Date
:
May, 2008
Product Name
:
The IUP Journal of Management Research
Product Type
:
Article
Product Code
:
IJMR10805
Author Name
:
C R Sathyamoorthi and L B Wally-Dima
Availability
:
YES
Subject/Domain
:
Management
Download Format
:
PDF Format
No. of Pages
:
9
Price
For delivery in electronic
format: Rs. 50;
For delivery through courier (within India): Rs.
50 + Rs. 25 for Shipping & Handling Charges
Download
To download this Article click on the button below:
Description
The paper analyzes the working capital management of retail domestic companies that are listed on the Botswana Stock Exchange. Working capital management is very important because a company that neglects its working capital management will soon run out of cash and may even have to close down. Data was collected from companies that are listed on the Botswana Stock Exchange. The reason for choosing the listed companies is because the financial statements for these companies are readily available and often more reliable than those of unlisted companies. The research findings reveal that the listed companies adopted a conservative approach in the management of their working capital and suggest that working capital policy is not static overtime, but varies with the changes in the state of the economy.
The effective management of corporate assets has taken on an added importance in the Botswana region, with the opening up of markets to international competition. The move towards global competition, strategic alliances, and the pressure to privatize has meant that good corporate governance has assumed urgency. Financial management practices can be considered as providing a sound framework for asset management. Investment in fixed assets is an area of management focus and research activity. This situation can be contrasted with working capital management which until recently received relatively little attention from researchers. At the same time, the efficient management of working capital is likely to yield significant results and its neglect can be highly problematic. The literature on corporate failure contains a rich set of evidence, linking poor working capital management as an important factor in corporate collapse. Altman's (1968) multivariate predictor model based on US companies includes working capital as one of the model components. Taffler (1977) using data drawn from the UK companies developed a four-variable model of failure prediction.
