NSU Research Contributions

Title : The Challenge in Managing Working Capital in An Emerging Economy-Case of Bangladesh

Authors : Sharif Ahkam, Syed Hossain, Sheikh Rabby, Shabnin Shorna, Nazmun Nahar

Abstract : The critical components of working capital are receivables and inventory. Various published research work commonly ends up with a conclusion that firms could possibly improve profitability by managing these assets more effectively implying that firms benefit from a reduction of receivables and inventory. Where we see the evidence of strong large companies in developed countries have better control over their working capital management; the firms in the developing countries appear to be less successful. In this paper, we take a critical look into the management of working capital using data from Bangladesh, a frontier economy that is growing rapidly. Particular questions asked is whether we see any indication of reigning in receivables and inventory, especially when there are indications that working capital balance is moving in the wrong direction. We found that firms have been unable to limit the amount tied up in working capital and firms are unable to offset amount tied up in receivables with a reduction in inventory. Unlike their compatriots in the developed world, management may face significantly limited access to capital and forced to tying up significant resources in management of inventory and receivables.

Journal : Asian Finance and Economic Review	Volume : 14	Year : 2024	Issue : 8
Pages : 632-645	City :	Edition :	Editors :
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