Analysis of working capital management on organisational profitability: A case study of Vine Pharmaceutical Limited

Abstract

Working capital management plays a vital role in the success of businesses because of its effect on profitability and liquidity. The purpose of the study was to analyze the working capital management on organizational profitability in Vine Pharmaceuticals limited. The study used a cross sectional design and both qualitative and quantitative data were employed. The study population comprised of staffs of Vine pharmaceutical limited. Primary data was collected using questionnaires, interviews among others while secondary data was got from reports, journals, internet, and magazines. Frequency tables and Pearson correlation coefficient tables were drawn using Statistical Packages for Social Scientist (SPSS). In these frequency tables, analysis was done with a corresponding percentage. The study finds a positive relationship between profitability and accounts receivables, cash management and inventories management. The study suggests that managers can provide value to their shareholders by creating incentives to reduce their accounts receivables to less than 30 days. It’s further recommended that management of Vine Pharmaceuticals limited should establish and strengthen the internal controls over cash and other financial resources to reduce on theft and mismanagement of cash resources.