Aims, Objectives and Research Questions
It has been crucial for being aware of effects of management of working capital indicators on performance of company. The dimension of enterprises change from local to international has been a part of competition in the market. The increase in competition in the market has been due to rise in globalization. The working method of companies need to be enhanced to increase efficiency in the market (Enqvist, Graham & Nikkinen, 2014). The profitability of the company has been totally depended on working capital. The working capital management (WCM) has been focused on ability of company for funding difference between long term assets and short term assets. Business organizations have been helping in providing several opportunities to customers with their offeres and products. The use of WCM has been helping in providing better outlook of the business organization in order to maintain a sustainable development ion market. Therefore, management of working capital and some other issues including resources that are financed. Acceptance of several efficient management has been in terms of working capital management (Agha, 2014). An effective and efficient management of working capital have no doubt in providing positive contribution to the performance of the company. However, it can be in related to the behavior of customers in the market. Recently, WCM has been an issue for various companies in the market. There has been strong relationship with mining industry of the Australian securities Exchange (ASX).
This research has been done for analyzing effect of working capital in performance of company in the mining industry listed under Australian Exchange. Various performance factors have been discussed in the research.
The research aims to analyze effect of working capital on performance of mining companies listed in Australian Security Exchange (ASX).
Following are objectives of the research:
- To identify the factors affecting the performance of mining companies in ASX
- To analyses effect of working capital on the mining companies in ASX
- To recommend strategies for improving efficiency of mining companies in ASX
Following are research questions:
- What are the factors affecting performance of mining companies in ASX?
- What is effect of working capital on mining companies in the ASX?
- How to improve efficiencies of mining companies in ASX?
Concept of working capital management
As commented by Baños-Caballero, García-Teruel & Martínez-Solano (2014), working capital has been a sum of owned assets and current assets. Working capital has been utilized for affording short-term expenses including labor, raw materials, general administrative expenses, tax and repair expenses. Working capital is also known as business capital that helps in creating greater importance for the development of company. The current assets in the company have been depended on the working capital. The current assets include money, stocks, receivables, securities and other current assets. The working capital and performance of companies have been included in development in the market. There have been chances of inequalities in current assets and liabilities of the company during its growth in the market. The profitability of the company has been totally depended on the working capital (Mwangi, Makau & Kosimbei, 2014). The working capital management has been focused on ability of company for funding difference between long term assets and short term assets. However, it can be in related to the behavior of customers in the market. Recently, working capital management has been an issue for various companies in the market. The liquidity in the market has been increasing in the market with improper management of working capital. The optimum level of WCM has been helpful in maintaining growth of company. The market of the ASX has been analyzed properly that include different dimensions of working capital in the market. The performance of company with the appropriate use of working capital has been mentioned in the literature review of various researchers (Abdulazeez et al., 2018). There has been several researches done on effect of working capital management and its impact on performance of the company. These researches explain that there has been neutral impact, which shows deficiencies in the policies of the company. Therefore, this research has been focused on measuring factors of working capital management. Most of the companies are not able to maintain their working capital in the operations. Therefore, it directly imposes effect on performance of the company in the market. Companies are not to track changes in the market and their assets and liabilities (Pais & Gama, 2015). The WCM has been a better way to track these changes in company. The dimensions of WCM has been including current ratios, CCC, average days of payment and inventory turnover.
Literature Review
Return on Assets refers to how much a company generates profit with available resources. It can be also called as Return on Investment (ROI) (Aktas, Croci & Petmezas, 2015). The correlation between operating performance and liquidity has been related to the monetary structure. The use of monetary structure has been helping ion maintaining a keen approach in linking working capital and performance of company in the market. Liquidity is directly proportional to performance of company. The company have to keep track of the assets invested in the market and take a proper step in order to maintain profit in the market. Therefore, the use of return on assets conceit have been depended in the profit that a company makes over their investment in the market. The use of the ROI has been helping in providing a keen approach to the development of the company. The value of company asset has been depended on the business strategies that it follow in the market.
Sales have been made on credit and payment recovery on these sales in period is called as number of days receivable (NDR). The cash conversion cycle has been describing the collection of period that helps organization for buying main figure of stock period (Nobanee & Ellili, 2015). This cycle has been depended on use of working capital in management of the organization. The performance of the company has been due to the investment of the company in the market. There have been chances of inequalities in current assets and liabilities of the company during its growth in the market. The working capital management has been deepened on several favors including NDR. The use of the NDR technique has been helping in proper management of the resources of the companies (Ismail, 2016). The amount of work done by employees in the development of the company has been depended in the organizational structure. Therefore, this has been an important section for growth of company in the market. The large quantities of the stick of the company has been transformed into the working capital that can be invested for the development of the company in the market. Therefore, there has been a frequent relationship between NDR and ROI.
Inventory has been a specific part of assets of the company. The decision making system of the company has been depended on the inventory control, management of the company in the market. The use of the inventory control has been depended on the working capital management in company. The performance of company in market has been depended in the inventory control of operations (Mathuva, 2015). There has been several researches done on effect of working capital management and its impact on performance of the company. The inventory control, deals with the management of resources in the stock of the company and maintains a keen approach to the development of the company. These researches explain that there has been neutral impact, which shows deficiencies in the policies of the company. The strength of the company has been depended on the business strategies used in the market. Therefore, by reducing the level of the inventory has been depended on turnover of the company in the market.
Concept of Working Capital Management
This research will select qualitative method for analyzing effect of working capital on performance of mining companies in ASX. The research will use positivism philosophy as it deals with hypothesis and scientific method regarding the impact of working capital on performance of mining companies in ASX. Deductive methodology helps in keeping up a basic way to deal with the advancement of the speculation in the research. The utilization of the deductive methodology has been keeping up a connection among variable and ideas of the examination think about (Mwangi, Makau & Kosimbei, 2014). Deductive methodology has been helping in finishing the examination contemplate in a brief timeframe period. The working capital and performance of companies have been included in development in the market. The research will use deductive approach for focusing on objectives of the research study. The use of descriptive research design will help in describing all the factors included in the study and providing a conclusion to it.
Secondary data collection method has been selected in this research. Data will be collected from using online journals, books and articles. This sample size will be 10 scholarly peer reviewed journals based on the research topic. (Farooq et al., 2016). Qualitative data analysis will be used to analyze data and information. Thematic analysis will be done by creating three themes based on the research objectives.
Research will follow all ethical considerations under different sections of academic research. Data and information will be kept safe and secure till the end of the research. Data will be secured under the Data Protection Act 1998 (Azeez, Abubakar & Olamide, 2016). Personal private information of the participants will kept secure and will not be used at any part of the research. All journals will be published and after 2012 year journal will be taken for the research study. All journals will be peer reviewed that help in checking validity and reliability of data sources. No participants will be forced to remain included in the research. They will be free to leave the research at any point of time. Data and information of the research will be used for only research purpose. There will be no tampering of data used during data analysis method. Results and outcomes of the research will not be published until the completion of research.
References
Abdulazeez, D. A., Baba, N. A., Fatima, K. R., & Abdulrahaman, Y. (2018). Working Capital Management and Financial Performance of Listed Conglomerate Companies in Nigeria. Journal of Accounting, Finance and Auditing Studies, 4(2), 49-66.
Agha, H. (2014). Impact of working capital management on Profitability. European Scientific Journal, ESJ, 10(1).
Aktas, N., Croci, E., & Petmezas, D. (2015). Is working capital management value-enhancing? Evidence from firm performance and investments. Journal of Corporate Finance, 30, 98-113.
Azeez, O. T., Abubakar, M. A., & Olamide, F. T. (2016). Analysis of the effects of working capital management on profitability of listed Nigerian conglomerate companies. FWU Journal of Social Sciences, 10(1), 10-20.
Baños-Caballero, S., García-Teruel, P. J., & Martínez-Solano, P. (2014). Working capital management, corporate performance, and financial constraints. Journal of Business Research, 67(3), 332-338.
Enqvist, J., Graham, M., & Nikkinen, J. (2014). The impact of working capital management on firm profitability in different business cycles: Evidence from Finland. Research in International Business and Finance, 32, 36-49.
Farooq, U., Maqbool, M. Q., Waris, M., & Mahmood, R. (2016). Liquidity risk, performance and working capital relationship of cash conversion cycle: An empirical study of the firms in Pakistan. International Journal of Information Research and Financial Review, 3, 1946-1951.
Ismail, L. A. L. L. O. O. (2016). Impact of working capital management on financial performance of SMEs across industries (Doctoral dissertation, University of Mauritius).
Mathuva, D. (2015). The Influence of working capital management components on corporate profitability.
Mwangi, L. W., Makau, M. S., & Kosimbei, G. (2014). Effects of working capital management on performance of non-financial companies listed in NSE, Kenya. European journal of business and management, 6(11), 195-205.
Mwangi, L. W., Makau, M. S., & Kosimbei, G. (2014). Relationship between capital structure and performance of non-financial companies listed in the Nairobi Securities Exchange, Kenya. Global Journal of Contemporary Research in Accounting, Auditing and Business Ethics, 1(2), 72-90.
Nobanee, H., & Ellili, N. (2015). Working capital management and performance of Kuwait construction companies.
Pais, M. A., & Gama, P. M. (2015). Working capital management and SMEs profitability: Portuguese evidence. International Journal of Managerial Finance, 11(3), 341-358.
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