Literature Review Of Working Capital Management

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The financing problem is one of the most important problems faced by these firms.

These firms need to be able to use their existing resources effectively and be self-sufficient because of the scarcity of funding resources and the insufficient accumulation of capital.

While lower investment in the working capital expressed as aggressive working capital policy is associated with higher returns and higher risk, more investment in the working capital expressed as conservative working capital policy is associated with lower return and lower risk [14].

The firm has to choose between aggressive and conservative working capital policies depending on its purpose [15].

Deferment of payments to suppliers can enable the firm to evaluate the product bought and may be a cheap and flexible funding source.

But, postponing payments can be expensive, if the firm has got a discount for early payment [9].

In this case, the industry sector will remain important for the Turkish economy in the future.

The industry sector, which plays a key role in the Turkish economy, is faced with many problems such as lack of qualified workforce, inadequacy of infrastructure and technology, weak competition power, and difficulties in marketing and financing.

Working capital management is concerned with the day-to-day activities rather than long-term investment decisions [7].

Working capital is a part of firm’s current assets, which are converted into cash within a year or less [8].

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