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Poor Working Capital Management Remain Major Cause of Business Failure

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  • Tesleem Adelodun Alade

    (Nikoy Nigeria Limited, Nigeria)

Abstract

Businesses must manage their working capital well since it affects their resilience and profitability. Liquidity and profitability must be balanced. Sustaining sufficient operating capital guarantees operational stability and on-time payment of debts. Shortening the cash conversion cycle and increasing efficiency maximizes cash flow. This approach provides advantageous lending terms and increases credibility with stakeholders. Conversely, poor working capital management can lead to cash flow issues, increased costs, and missed opportunities. Overtrading brought on by low liquidity might jeopardize financial stability. To secure a business’s long-term success in the face of changeable market conditions, regular assessments and adaptable plans are essential. Thus, this study focuses on the effects of poor working capital management resulting to business failure.

Suggested Citation

  • Tesleem Adelodun Alade, 2024. "Poor Working Capital Management Remain Major Cause of Business Failure," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(1), pages 1120-1124, January.
    • Handle: RePEc:bcp:journl:v:8:y:2024:i:1:p:1120-1124
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    References listed on IDEAS

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    1. Boisjoly, Russell P. & Conine, Thomas E. & McDonald, Michael B., 2020. "Working capital management: Financial and valuation impacts," Journal of Business Research, Elsevier, vol. 108(C), pages 1-8.
    2. Garikai Mandipa & Athenia Bongani Sibindi, 2022. "Financial Performance and Working Capital Management Practices in the Retail Sector: Empirical Evidence from South Africa," Risks, MDPI, vol. 10(3), pages 1-17, March.
    3. Tan, Yong, 2016. "The impacts of risk and competition on bank profitability in China," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 40(C), pages 85-110.
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