Working Capital Management in Small and Medium Enterprises

Abstract

Working capital management is a crucial aspect of financial management that ensures the smooth functioning and operational efficiency of business organizations, particularly Small and Medium Enterprises (SMEs). It involves the management of current assets and current liabilities to maintain adequate liquidity and profitability. Effective working capital management enables enterprises to meet short-term financial obligations, improve cash flow, and support day-to-day business activities. The importance of working capital management and its impact on the financial performance and sustainability of Small and Medium Enterprises. The study focuses on major components of working capital such as cash management, inventory management, accounts receivable, and accounts payable. It also analyzes the relationship between working capital efficiency and profitability using financial indicators including the current ratio, quick ratio, inventory turnover ratio, and working capital turnover ratio. Secondary data collected from financial statements, business reports, and published records of selected SMEs form the basis of the analysis