What Are The Determinants of Working Capital Requirements

YARDSTICK INTERNATIONAL COLLEGE
COLLEGE OF POSTGRADUATE STUDIES DEPARTMENT of BUSINESS

ADMINSTRATION
COURSE; - FINANCIAL MANAGEMENT
CRITICAL ARTICLE REVIEW WHAT ARE THE DETERMINANTS

OF WORKING CAPITAL REQUIREMENTS
ASSIGNMENT 1
SUBMITED BY: - HANA GIRMA
IDNO.MO/3116/14A
SUBMITTED To;
Ass. Prof KASSU
SUBMISSION DATE; JAN 31, 2023
1
Title: the Determinants of Working Capital Requirements
Year of Publication:
2017
Publisher:
IISTE
Outer;
NAOLAPO, Adekunle A, PhD
INTRODUCTION
Working capital management is concerned with efficient management of different
components of working capital- current assets and current liabilities. Managers of firms are
required to operate at optimal level of working capital. Excess working capital is not an ideal
level because capital will be tied up unnecessarily and this will not generate additional income to
the firm. Also, inadequate working capital may lead to the collapse of the firm because there will
be disruption in the production process since the firm will not be able to meet up with its short-
term commitments. Deloof (2003), Howorth and Westhead (2003), and Afza and Nazr (2007)
affirm that firms try to maintain an optimal level of working capital that maximizes that value.
Working capital is seen to affect the liquidity and profitability of the firm (Raheman and Nasr
2007) as well as the risk of the business (Smith 1980). Most studies in working capital
management in developing and emerging countries as found in the extant literature examined the
relationship between working capital and firm performance. Factors that determine the working
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capital management are often not explored. The lack of clarity about the determinant factors of
working capital especially in an emerging economy like Nigeria is the motivating factor for this
study. This present study wants to fill in the gap noticed in the previous studies by looking at
factors that influence the working capital of 30 listed non-financial firms in Nigerian business
environment, for the period 2004-2017.
B/ Description of the study
 What was the purpose of the research?
- The purpose of the the researchers were to examine the The purpose of this
paper is to examine the determinants of working capital requirements of thirty
non-financial firms listed on the Nigerian Stock Exchange between 2004 and
2017. Panel data methodology was employed and Ordinary Least Squares
(OLS) used as estimation technique. The Working capital requirement (firm’s
networking capital deflated by total assets) was used as dependent variable.
 Were the research questions, objectives or hypothesis (es) clearly stated?

- The researchers’ questions, objective or hypothesis appropriately stated.
C/ Literature Evaluation
 Does the literature review seem thorough & recent (within the last 5 years)?
- The researchers were most use literature review didn’t recent within in the last
five/5/ year time frame work.
 Does the content of the literature review relate directly to the research problem?
- The content of the literature review directly related to the research problem.
D/ Conceptual Frame work

 Does the research use a theoretical and/or conceptual model?
- The outers were use both a theoretical and conceptual models.
 Does the model guides the research and seem appropriate?
- The conceptual theory model didn’t guides the research appropriate.
3
E/ Sample
 Who were the subjects?
- The outers were use the subject top and middle managers of in high
technology companies.
 Were the inclusion/exclusion criteria specified?
- The outers didn’t clearly state inclusion and exclusion criteria specified.
 How representative is the samples?
- The outers used representative in the sample including 120 males and 33
females based on these 119 middle managers and 34 top managers.
 Was there any selection bias evident in the sample selection?
- The outers didn’t have bias selection in the sample selection events
F/ Method and Design

 Describe the study design-is it appropriate?
- The outers used Descriptive study design and also they were put
appropriately.
 How was the research conducted?(The study procedure itself) & data collected.
Data for this study were sourced from the various annual financial reports of
the firms, Nigerian Stock Exchange and the Central Bank of Nigeria bulletin.
The firms cover 14 industrial groups. In all, this study utilizes data from 30
non-financial firms (purposely selected from population of 121 firms) for the
8- year period 2004-2017. This represents 240 firm-year observations.
 Were the subject’s rights protected?
- The authors were carefully right protected.
4
G/ Analysis
 How were the data analyzed?
- The outers were data analysis by used descriptive statistics, regression

analysists, correlation analysis and mediation analysis.
 Do the selected statistical tests appropriate?
- The authors were the selected satirical tests set appropriate
 Were the results significant?
- The researchers result demonstrate that Innovative work behavior has the
largest mean while process innovative which is the sub dimension of firm
innovativeness has the lowest mean. It shows that managerial employees of
high technology company believes that their employees have high level of
innovativeness in their behaviors, they generate, promote and realize new
ideas but their organizations have relatively less focus towards making
innovations in their processes. so, the result is significant.
H/ Result
 What were the findings of the study?
- Working capital represents the proportion of total funds used for the day-to-
day running of the affairs of a company. A firm requires an optimum level of
working capital in order to avoid problems of having too much or too little
investment in it. To determine this optimum level is one of the primary
functions of management. There are both internal and external factors that
determine the working capital level of a firm. The present study considers
seven of such factors as found in the empirical literature and see whether these
factors The researchers found indicate that managers of the organizations have
to realize the importance of flexible human resource management.
 Are the results presented in a clear and understandable way?
- The authors result had been presented in a clear way and understand able way.
 How did the authors interpret the results?
- The Outers interpret the result by the use of table.
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 Were there any study limitations discussed?
- The outers were Discuss any studied limitations in different method way.

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YARDSTICK INTERNATIONAL COLLEGE

COLLEGE OF POSTGRADUATE STUDIES DEPARTMENT of BUSINESS

COURSE; - FINANCIAL MANAGEMENT

CRITICAL ARTICLE REVIEW WHAT ARE THE DETERMINANTS

SUBMITED BY: - HANA GIRMA

Ass. Prof KASSU

SUBMISSION DATE; JAN 31, 2023

B/ Description of the study

 What was the purpose of the research?

 Were the research questions, objectives or hypothesis (es) clearly stated?

D/ Conceptual Frame work

- The outers were use both a theoretical and conceptual models.

 Does the model guides the research and seem appropriate?

- The conceptual theory model didn’t guides the research appropriate.

 Were the inclusion/exclusion criteria specified?

 How representative is the samples?

 Was there any selection bias evident in the sample selection?

F/ Method and Design

- The outers were data analysis by used descriptive statistics, regression

 Do the selected statistical tests appropriate?

- The authors were the selected satirical tests set appropriate

 Were the results significant?

 Are the results presented in a clear and understandable way?

 How did the authors interpret the results?

- The Outers interpret the result by the use of table.

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