Impact of Working Capital Management on Performance and Profitability of Barclays Plc

This study focuses on the impact of working capital management on the performance and profitability of Barclays Plc. It explores the components of working capital management and its importance in maintaining financial health and operational success. The research aims to identify the elements of working capital management and their impact on profitability, understand the importance of working capital in determining performance, and analyze the working capital management practices of Barclays Plc.

Business Project

Table of Contents
TITLE .............................................................................................................................................1
INTRODUCTION ..........................................................................................................................1
RESEARCH OBJECTIVES, QUESTIONS OR HYPOTHESES FOR PROJECT........................3
LITERATURE REVIEW ...............................................................................................................1
The components of working capital management and its impact on profitability of an
organisation ................................................................................................................................1
The impact of working capital on determining the performance and profitability of an
organisation.................................................................................................................................2
The importance and impact of working capital management on performance and profitability
of Barclays Plc............................................................................................................................3
RESEARCH METHODOLOGY ....................................................................................................6
ANALYSIS .....................................................................................................................................8
CONCLUSION .............................................................................................................................22
REFERENCES .............................................................................................................................23

TITLE
To identify the impact of working capital management on overall performance and
profitability of an organisation. A study on Barclays plc.
INTRODUCTION
Working capital management is an important aspect that help in maintaining an optimal
balance between every component of working capital like inventory,cash, payables, receivables
and many more. All these are crucial that create value within the company in order to attaining
competitive advantage (Bagh and et. al., 2016). Thus, proper management of working capital is
one of the crucial activity for company as it help in maintaining financial health and operational
success. For attaining the same, good management of company is consider as an ability to
effectively utilize working capital management in order to maintain a solid balance between
organisational growth, liquidity and its profitability level as well. In context of this, company
uses working capital within their day to day operational activities that determine the difference
between current assets and current liabilities or debts as well. Management of working capital
includes the goal that support in maximizing the operational efficiency which directly support in
improving profitability level of the company.
Background of company
Current research is based in Barclays plc, is British multinational investment bank and
financial service company that operate their business in London with the aim of improving their
profitability level. In this company also manage working capital to effectively analysing the
performance at market place. Company was established in 1690 in City of London by Nigel
Higgins with the aim of attaining the success. In this regards, Barclays deployed the world's first
cash dispenser.
Rationale of research
In this regards, one of the main reason of selecting this research is to analysis the impact
of working capital management over the profitability of company. With the help of this,
investigator easily improve their skills and knowledge about the research topic. Mainly, this
specific theme provide vast information and scope through which researcher easily develop a
critic analysis towards the selected research topic that directly support in attaining positive and
reliable results (Ahmad and et. al., 2017). The main focus of this research is to analysis how
1

working capital is managed and influence organisational profitability. By analysing the same,
investigator is able in undertaking the same research in future and also attain chances to
accomplishing valid results.
Research Gap
It is one of the important section of research as it define the research problem that needs
to be addressed. Mainly, it is systematic review that can direct research agendas in order to
influence future activities and scope of the project. Current research is based on working capital
management and its impact on the overall profitability level of the company. This will support
business organisation in managing their operational efficiency by evaluating or controlling
overall profit and expenses. With the help of this, company may develop the positive
performance at market place (Afrifa and Padachi, 2016). By undertaking this study business
organisation easily analysis their day to day activities that help them in reducing the chances of
increasing expenses and at the same time also maximizing the profitability level.
2

RESEARCH OBJECTIVES, QUESTIONS OR HYPOTHESES FOR
PROJECT
Research aim
“To identify the impact of working capital management on overall performance and
profitability of an organisation”. A study on Barclays plc.
Research objectives
 To Identify the elements of working capital management and its impact on profitability of
an organisation.
 To identify the impact of working capital on determining the performance and
profitability of an organisation. To understand the importance and impact of working capital management on
performance and profitability of Barclays Plc.
Research questions
 What are the components of working capital management and its impact on profitability
of an organisation?
 What are the impact of working capital on determining the performance and profitability
of an organisation? What are the importance and impact of working capital management on performance and
profitability of Barclays Plc?
Research design and approach
Exploratory research design will be used for doing this research as it supports researcher
in determination of best data collection method. Along with this, quantitative approach of
research will also use by investigator for collecting information from the questionnaire (Flick,
2015). Therefore, exploratory research design and quantitative research approach are more useful
in gathering of reliable and valid information about the impact of working capital management
and its effect on profitability and productivity of business.
3

LITERATURE REVIEW
The components of working capital management and its impact on profitability of an
organisation
According to the Wasiuzzaman, 2015, working capital is recognised as a basic requirement
of an organisation in order to circulate the function of organisation on regular basis without any
breakdown. Since last decades the essentialness of working or operating capital administration
increased in terms of completing the working capital requirement of business. C. A. and C. L. are
the key components of working capital. The difference of current assets and current liabilities is
recognised as a working capital of an entity. the current assets present as a resources of
organisations utilised within one financial year. whereas the current liabilities also remain same
in nature to current assets as the settlement of current liabilities also made less than a duration of
one year.
On the other hand, Tahir and Anuar, 2016, current assets are the combination of further
elements as cash and cash equivalents, stock, debtor, trade receivables, expenses paid in advance
and investments made for short term period. Current liabilities are the combination of trade
payables, outstanding payments, short-term borrowings, tax payables, dividend payables and
short-term debts. The overall structure helps in ascertaining the day to day running business
requirement. the process of converting the raw form of stock in to cash and cash equivalent is
considered as a WCC (Working Capital Cycle). It is one of the key element of working capital
management in organisation context as the cycle present the capacity to generate cash and
completing its overall operational cycle in a year.
As per the view presented by Singh, Kumar and Colombage, 2017, Planning for working
capital is part of a company's financial planning, some aspects are, for example, capital
budgeting or capital optimizing. First two are mainly capable of long-term investment and risk
management. Thus WCM focuses mainly on corporate short-term funding and brief-term
investment choices. Because it accounts for more than half of their total capital for these
companies. Working capital management is essential for a business, particularly for production,
trade and logistics firms, as WCM affects productivity and profitability specifically in such
firms. Inefficient WCM can lead to default, even though a company's productivity is consistently
positive. One explanation might be that high rates of current assets change. effective WCM must
4

handle operating capital in a way in which organisation be able to correlate the current and
operative objectives of business. the risk of default on the repayment of short-term commitments
on the one hand and minimizes the increase in excess working capital rates at the other efficient
management of working capital not only assist performance of organisation but also assist in
leading the organisational objectives towards sustainable development (Shan and et. al., 2015). A
sustainable image of business also reflects a clear image of business operation and advise the
management to correlate the administrative requirement with its day to day running operations.
appropriate WCM keep business process in an optimum level and prevent uncertainties form
daily operations. In terms of ascertaining the raw material requirement the organisers analyse the
potential impact upon business performance and profitability of organisation. if entity is enough
sufficient subject to necessity of operating capital in more effective manner.
The impact of working capital on determining the performance and profitability of an
organisation
According to the Nobanee and Haddad, 2014, efficiency and profitability mainly based on
the corrective operating capital and administrative procedure for business operations. the
working capital cycle extracts the efficient WCM. It is calculating considering the cash
conversion cycle of organisation. the scale of cash outflows and inflows helps in ascertaining the
firm’s key goals and objectives in key direction. Efficient use of raw material usage helps in
maintaining the requirement of production process and also assist in meeting the regular
production requirement. Positive impact falls upon entire profitability and performance of
organisation. with the frequent use of required standards and streams the it become feasible to
complete the daily requirement of suppliers and customers. Circulating regular process of
business in business operations make the process of getting payment in more feasible and
systematic manner.
As per the view presented by Muhammad and et. al., 2015, proactive approach of working
capital management and allocation of resources in optimistic way leads organisation to attain
competitive advantage. It ascertains the credibility among creditors and build a clear image and
perspective in the eye of stakeholders. Thus, it is clearly understanding that sustainable and
prefect image of business basically based on proactive management of working capital. There is
a key contribution found in order to construct a stable structure of working capital of
organisation. the trade policies, credit policies, dividend and taxation policies are the key
5

elements to construct the base of efficient working capital base. It is anticipated that the lag in
period of inventories reduces delay the production process and it increase the entire cash
conversion cycle. The scale of cash conversion cycle also gets impacted due to lag in process of
managing the daily supply requirement. Not only lag in period of production process but also the
lag in period of getting payment form debtors affect the performance and efficiency of
organisation.
According to the Mehtap, 2016, the working capital requirement varies from entity to
entity. Working capital management in financial industries remain different because the cash and
cash equivalent remains high in amount. In the context of daily working requirement
organisation put significant efforts towards making the operation smoother manner. In
consideration to developing an effective base of WCM and organisational culture it is essential to
keep monitoring the working capital structure of business for smooth functioning. Use of current
assets is the key parameters subject to boost the working capital structure of business. The role of
business performance also states a clear vision and control towards managing the daily capital
requirement. Cash is one of the key element that maintains an optimum level of liquidity and
functionality of business in systematic manner.
In financial industries cash conversion cycle runs around receivables and days payable. the
gap between the payable must be less and receivable days must be remained high in order to
circulate the cash cycle of business. in order to determine the consecutive working capital
management and efficient flow of cash overall perspective remain centralized towards enhancing
the performance and profitability of business entity (Mathuva, 2015).
The importance and impact of working capital management on performance and profitability of
Barclays Plc
According to the Lamptey, Frimpong and Morrison, 2017, working capital management
is very critical due to its impact on the company's productivity risk, thus the business's value. A
firm's decision on financial management has four facets, including economic decision, funding
decision, dividend decision, and liquidity decision. The allocation of working capital is
considered a critical concern with the organisation’s profitability and short-term investment
decision. It also has an impact on the company's liquidity to competitiveness. The company's
wealth is created by the optimal use of operating capital.
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As per the view presented by Kumaraswamy, 2016, the term working capital indicates to
the figures of financial needed to maintain day-to-day spending on a company company's
operating activities. It is literally necessary to run the company's wheels. Financing company's
effectiveness depends on the tension between fluency of cash and profit. The goal of working
capital planning is to maximize profits, which leads to a decrease in the likelihood that the
ripening short-term debt cannot be met. The problem here is operating capital management, a
business must take into account all things in both budgets and seek to manage risk tolerance. The
high volatility risk of a company leads to high profitability.
According to the Jamil and et. al., 2015, in Banking industry, the liquidity level remains
at peak of point and it reduces the complexities whenever the liquid requirement remains high in
organisational context. Nonetheless, brief-term decisions in designing a financial strategy in
businesses are not less critical because working capital planning plays a vital role among short-
term policies in that a business's shareholder value and balancing a business's two objectives of
productivity and flexibility. Many work on corporate finance typically relates to decisions on
lengthy-term funding and pay-out policy. The willingness of the government to continue its
operations without endangering liquidity was accepted by operating capital.
According to annual report of Barclays the Leader in investment banking is focused on
improving our service. its introduced a new dual-country virtual finance network over the course
of the year, mainly serving customers of the Corporate and Accounting firm, which was recently
launched in Europe or Europe. In 2018, Corporate Bank and the British government unveiled a £
1 billion residential development fund to support housing production in England. As the working
capital framework of organisation is centralised upon leaving less commodities taxation so that
the durability of payment gets decreased for the year 2020. The management is monitoring the
liquidity of bank and keep compare the feasibility and transparency between large cash
payments. In order to construct a valid reason for sustainable working capital structure the
operations are quite confirm and elaborative in annual meeting. The financial position of Group’s
presents a favourable and profitable results. The management and financial professional of
Barclays prepared a three years’ sustainable working capital management plan. The management
is quite confident subject to future working capital policy.it stated a clear vision and valid
formation of presenting the data in predefined manner. The forecasts not only present a viable
7

image and existence of banking group but also it reflects towards the strong capital structure and
bond of organisation in near three-four years (Strategic Report of Barclays, 2018).
8

RESEARCH METHODOLOGY
Research methodology is considered as the particular process or techniques which is
utilised for identifying, selecting, processing as well as analysing information about topic. So,
with the assistance of this researcher may able to evaluate the validity as well as reliability of all
research (Gioia, Corley and Hamilton, 2013).
Research design: It is regarded as the framework of techniques as well as methods
opted through researcher for combining several elements of investigation in analytical manner in
order to managed the research problems effectively. It have certain kinds which are which are
exploratory, experimental and descriptive. Among all mentioned design, exploratory research
design will be used as it help in identification of research impact (Green, Camilli and Elmore,
2012).
Time frame: In research time frame is defined as the set time period that researcher
required and takes for accomplishment of work. Cross sectional: This is considered as an observational research type which examine
information of variables accumulated at given time period across sample population.
 Longitudinal: This is considered as the research design which includes repeated similar
variables observation over long or short duration (Kumar, 2019).
9

Qualitative approach: This is executed in case where relation among accumulated
information as well as observation developed as per the numerical calculation. It is associated to
naturally existent phenomenon, may be proved or disproved with the help of statistical
computation. Researcher rely upon this approach in which they are anticipated to conclude
“why” a specific techniques exists along with what is the viewpoint of respondents (Mackenzie,
Tan, Hoverman and Baldwin, 2012).
Quantitative approach: This is regarded as the approach which is executed where it is
vital for researcher to has statistical conclusion to accumulate actionable visual image. As
number facilitates a effective perspective for formulating essential decision. It is crucial for the
effective accomplishment of research as conclusion comes as per the numbers as well as analysis
will only prove to be efficacious for investigation (Mackey and Gass, 2015).
10

From the above two approaches, researcher utilised the quantitative approach as this aids
them to do the in-depth study and result will in numeric forms which will be appropriate generate
relevant data.
Data collection: This is regarded as the procedures of accumulating as well as measuring
information upon the variables of interest in an systematic way which allows ones to answer the
explained research questions, evaluate results ans test hypothesis (McCusker and Gunaydin,
2015). It is of two types that are: Primary data collection: This is considered as an information which is accumulated
through researcher for the first hand source with the help of surveys, experiments,
interviews and others.
◦ Face to face interview: This is the primary methods which allows researcher the
ability to has interviewers accumulated data regarding behaviour towards specific
topics (Miller,and et. al., 2012).
◦ Questionnaires: This is considered as an evident methods that is established through
set of question related to research issues. This basically involves set of questionnaires
such as closed ended or open ended. Secondary data collection: This is regarded as the information that is collected through
some one else for an intent other than recent project of researcher (Quinlan and et. al.,
2019). It have already undertaken the statistical analysis. Some secondary data
collection methods are:
◦ Data available on internet: This is known as the famous ways of accumulating
secondary data. As in this information is readily available upon internet as well as
may be downloaded easily.
Therefore, for this research, researchers utilise the questionnaire methods as it is known
as the evident method and also it is the faster way to obtain relevant outcomes (Riedl, Davis and
Hevner, 2014).
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ANALYSIS
Data analysis introduces to the significant section of investigation as it support in
analysation of information about the selected topic. In order to analysis quantitative data, content
analysis will be going to used. It is an effective research tool that is applied to determine the
presence of certain themes, concepts or words. By using content analysis, investigator can
quantify as well as analyse meaning of such certain themes (Scotland, 2012).
Questionnaire
Q1) Are you aware about the effect of working capital management over profitability of
company?
a) Yes
b) No
Q2) What is the main elements of working capital management within an organisation?
a) Account Receivables
b) Account Payable
c) Inventory
d) Money
Q3) Does money is main component of working capital management that impacted over
profitability of an organisation?
a) Yes
b) No
Q4) In which manner, working capital impact on determining the performance and profitability
of an organisation?
a) Positive
b) Negative
Q5) What are the factors that help an organisation in determining requirements of working
capital?
a) Length of operating cycle
b) Terms of credit
c) Turnover of inventories
d) Nature of production technology
12

Q6) What is the important factor that impacting working capital requirements within an
organisation?
a) Business nature
b) Size of business
c) Conditions of supply
d) Market conditions
Q7) What are the significance of working capital management within Barclays Plc.?
a) Enhanced Credit Profile And Solvency
b) Higher level of Profitability
c) Higher level of Liquidity
d) Positive Financing Conditions
Q8) What are the major issues of challenges that are faced by Barclays Plc while managing
working capital?
a) Lack of access to required information
b) Lack of formal structure
c) Too many perspectives and stakeholders
d) Time constraints
Q9) Does management of working capital beneficial for Barclays Plc in achievement of
competitive advantage?
a) Yes
b) No
Q10) Provide any recommendation to the Barclays Plc in management of working capital
effectively.
Frequency Table
Q1) Do you have idea regarding effect of working capital management on
profitability of company?
Frequency
a) Yes 40
b) No 10
Q2) What is the main element of working capital management within an Frequency
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organisation?
a) Account Receivables 9
b) Account Payable 11
c) Inventory 10
d) Money 20
Q3) Does money is main component of working capital management that
impacted over profitability of an organisation?
Frequency
a) Yes 35
b) No 15
Q4) In which manner, working capital impact on determining the
profitability and performance of an enterprise?
Frequency
a) Positive 40
b) Negative 10
Q5) What are the factors that help an organisation in determining
requirements of working capital?
Frequency
a) Length of operating cycle 12
b) Terms of credit 10
c) Turnover of inventories 15
d) Nature of production technology 13
Q6) What is the main factor that directly affecting working capital
requirements within an organisation?
Frequency
a) Business nature 12
b) Size of business 10
c) Conditions of supply 13
d) Market conditions 15
14

Q7) What are the significance of working capital management within
Barclays Plc.?
Frequency
a) Enhanced Credit Profile And Solvency 15
b) Higher level of Profitability 10
c) Higher level of Liquidity 13
d) Positive Financing Conditions 12
Q8) What are the challenges faced by Barclays Plc while managing
working capital?
Frequency
a) Lack of access to needed information 15
b) Lack of formal structure 7
c) Too many perspectives and stakeholders 12
d) Time constraints 16
Q9) Does management of working capital beneficial for Barclays Plc in
achievement of competitive advantage?
Frequency
a) Yes 40
b) No 10
15

Discussion on the basis of primary source i.e. Questionnaire
Theme 1: Awareness regarding the effect of working capital management over profitability of
company
Q1) Do you have knowledge about the effect of working capital
management on profitability of company?
Frequency
a) Yes 40
b) No 10
40
10
a) Yes
b) No
Interpretation: From the above discussed graph it can be examined that working capital
management is refer to the balance between asset and liabilities within the organisation ion order
to manage its operating efficiency level. Mainly , it is made up of organisational current assets
minus its current liabilities. In addition of this, working capital is focus on ensuring sufficient
liquidity within the company that help in satisfy short term expenses and debts as well. In this
regards, 40 out of 50 respondents give their views that, working capital management is play a
crucial role in business organisation and it also put their impact on its profitability level. As it
includes all the management decision or action that directly influence the effectiveness and size
of the company. On the other side, rest of 10 people think that ineffective management of
working capital may reduce the possibilities of attaining higher profitability level.
16

Theme 2: Main component of working capital management
Q2) What is the main component of working capital management within
an organisation?
Frequency
a) Account Receivables 9
b) Account Payable 11
c) Inventory 10
d) Money 20
9
11
10
20
a) Account Receivables
b) Account Payable
c) Inventory
d) Money
Interpretation: As per above given graphical presentation it can be examined that there are
different component of working capital management which support business organisation in
making their operations more effective and efficient. In this regards, 9 out of 50 respondents give
their views that account receivables is the major component that directly contributes in managing
the working capital of company through which company can easily improve their performance.
11 people think that account payable is also consider as a effective component that support in
controlling expenses of the company. Along with this, 10 participant said that inventory is a
component that help in effectively manage both asset and liability of company. On the other side,
17

20 participant give their views that money is one of the effective and appropriate component by
which company can easily manage and operate organisational activities.
Theme 3: Money is main elements of working capital management
Q3) Does money is main component of working capital management that
impacted over profitability of an organisation?
Frequency
a) Yes 35
b) No 15
35
15
a) Yes
b) No
Interpretation: According to the above mentioned graph it can be evaluated that
working capital management is play a crucial role in business as it help in making equal balance
between current asset and current liabilities. With the help of this, firm can improve the chances
of attaining higher profitability level. In this regards, it also consist various aspects in which firm
can evaluate the overall performance of company. As it also create values for the stakeholders
within the business organisation that emphasized the profitability level of company. In this
regards, 35 out of 50 people give their views that money is one of the important component of
working capital management that support organisation in effectively implementing entire
activities of company and at the same time also may increase the profit margin that aid in
18

attaining higher success at market place. On the other side, rest of 5 participants think that money
is not an important component as there are different effective aspect that is related with working
capital of company.
Theme 4: Impact of working capital management
Q4) In which manner, working capital impact on determining the
performance and profitability of an organisation?
Frequency
a) Positive 40
b) Negative 10
40
10
a) Positive
b) Negative
Interpretation: Working capital management is crucial to overall strategies which is
adapted through firm to manage the relation among their short term assets as well as liabilities
with the aim to assure that this continues with their operation and accomplish their duties when
they fall due. It is vital to assure that firms maintain effective cash flow for meeting their short
term operating cost as well as responsibility. The main components of working capital are money
is coming in, money is going out as well as the stock management. So, as per the above analysis,
it has been interpreted that money is the main component of working capital management as out
of 50 respondents 35 are responding towards yes as working capital management is all about the
money management and rest 15 are inn favour of No.
19

Theme 5: Factors that help an organisation in determining requirements of working capital
Q5) What are the factors that help an organisation in determining
requirements of working capital?
Frequency
a) Length of operating cycle 12
b) Terms of credit 10
c) Turnover of inventories 15
d) Nature of production technology 13
12
10
15
13
a) Length of operating cycle
b) Terms of credit
c) Turnover of inventories
d) Nature of production
technology
Interpretation: The working capital management impacts in both the way that is positive as
well as negative. As lack of effectual working capital management not only minimises
organisational profit but this also have huge affects upon their position of financial leverage that
may drives towards failure of business too. Moreover, this also affects positively as this assures
that firms have sufficient cash flows for accomplishing the obligation of short term debts as well
as operating expenditure. As execution of appropriate working capital management is a great
way for various organisation for improving it earnings. So, as per the above analysis, it has been
interpreted that working management have impact on determining the performance and
20

profitability of an organisation. So, among 50 respondents 40 are saying it impact positively as
well as rest of them that are 10 respondents are in favour of negative one.
Theme 6: Main factor that affecting working capital requirements within an organisation
Q6) What is the main factor that affecting working capital requirements
within an organisation?
Frequency
a) Nature of business 12
b) Size of business 10
c) Conditions of supply 13
d) Market conditions 15
12
10
13
15
a) Nature of business
b) Size of business
c) Conditions of supply
d) Market conditions
Interpretation: There are various factors such as length of operating cycle, terms of
credit, turnover of inventories, nature of production technology and others that help an
organisation in determining requirements of working capital. As per the above analysis, it has
been interpreted that among 50 respondents 15 are in favour of inventories turnover as the size
of inventories is large but turnover is slow so small company will required more working capital.
Also, in case inventories are small but its turnover is fast then firm required more working
capital. 13 are saying production technology nature, 10 are responding towards the terms of
21

credits and rest of them that are 12 are in favour of operating cycle length as conversion of cash
by several stages such as raw material, semi processed products, final products, debtors as well
as bill receivable in cash considered as specific time period. Also, the longer operating cycle
time needs more capital.
Theme 7: Importance of working capital management in context of Barclays Plc.
Q7) What are the importance of working capital management in context of
Barclays Plc.?
Frequency
a) Improved Credit Profile And Solvency 15
b) Higher Profitability 10
c) Higher Liquidity 13
d) Favourable Financing Conditions 12
15
10 13
12
a) Improved Credit Profile And
Solvency
b) Higher Profitability
c) Higher Liquidity
d) Favourable Financing
Conditions
Interpretation: This graph been interpreted importance of working capital management
get by Barclays Plc. 15 out of 50 employees have idea as improved Credit Profile And Solvency
is major significance of working capital management as it helps an organisation in managing
relationship between assets and liability. 10 employees of Barclays Plc have idea as management
of working capital help them in increasing profitability ratio. 13 respondents have idea as it
22

support an enterprise to get higher liquidity and remaining 12 respondents have knowledge as
working capital management support an organisation by providing favourable Financing
Conditions. These are main importance which will be beneficial for the performance and success
of company.
Theme 8: Challenges faced by Barclays Plc while managing working capital
Q8) What are the issues that are faced by Barclays Plc while managing
working capital?
Frequency
a) Lack of access to needed information 15
b) Lack of formal structure 7
c) Too many perspectives and stakeholders 12
d) Time constraints 16
15
7 12
16
a) Limited access to needed
information
b) Lack of formal structure
c) Too many stakeholders and
perspectives
d) Time constraints
Interpretation: This has been concluded different challenges that have been faced by
Barclays Plc while managing working capital. 15 respondents have idea as limited access to
needed information is major issue while management of working capital. 7 respondents have
opinion as lack of formal structure is major challenge when company require to maintain
relation between assets and liabilities. 12 participants have view as too many stakeholders and
23

perspectives are main challenge as it create conflict which is not good for the success and growth
of business. Remaining 16 employees of Barclays Plc have knowledge as time is major challenge
while managing assets and liabilities, inventory and many components of working capital
management.
Theme 9: Management of working capital beneficial for Barclays Plc
Q9) Does management of working capital beneficial for Barclays Plc in
achievement of competitive advantage?
Frequency
a) Yes 40
b) No 10
40
10
a) Yes
b) No
Interpretation: From the above given data, it has been concluded management of
working capital is beneficial or not for company in achievement of competitive advantage.
Majority of participants said yes as working capital management is beneficial as it help an
enterprise by managing its assets and liabilities, and also providing better outcomes to increase
their profitability. 10 respondents are not agreed according to this statement because they said as
management working capital taken more time of company.
Discussion on the basis of secondary source i.e. Literature review
24

As per the above findings it is cleared that working capital efficiency is the key source of
succession of the organisation and it also remain essential in terms of determining the
profitability and liquidity requirement of organisation. an effective flow of operative and
administrative activities also makes a significant change and clarify the objectivity of business in
various direction (Indiastuti and Febrian, 2015). The primary objective of working capital
management become quite clear form the above evaluation that how the efficient working capital
requirement of business make the process more feasible and controllable for future events and
incidents. The discussion also focuses upon the major concerns arise due to having high liquidity
in business. managers and professionals have to focused upon maintaining the effective
strategies and plans to maintain a feasible base for business organisations.
The role of working capital components also found vital in organisational context and the
strategic planning regarding the components (current assets and current liabilities) is made by
recognising the requirement of business. in the given context the management of current assets
and current liabilities are constructed by entity to build such a structure in which the entity
become feasible and effective towards management and admiration. The implications towards
high liquidity also remain a concerning object for entities. To control the challenges of high
liquidity can be overcome by controlling operating expenses and losses arise due to misuse of
resources in business process (Enqvist, Graham and Nikkinen, 2014). So considering all of the
aspects it can be ascertained that holding a strong base on current assets and liabilities can lead
organisation to attain its desirable objectives in near future. By supervising the short term
financial requirement and reducing the day to day miscellaneous requirement the risk of high
liquidity can be controlled by financials.
Working capital management of Barclays stated that how moderate policies and a flexible
working capital base keep trying to maintain the liquidity level in optimistic and adequate level.
Even after having economic challenges like Brexit and financial crisis the management didn’t
panic and find out possible solutions to restructure the base of working capital in organisational
context. it is also quite clear for the organisation that remain stable and consistent with liquidity
and financial policies somewhere affect the performance and profitability of organisation. overall
it is tried to correlate the financial objectives and goals of an organisation with the strategic
objectives of business ( Bhatia and Srivastava, 2016).
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As the relation between working capital efficiency with profitability also presents some
favourable aspects regarding assisting the organisational base with efficient working capital
structure. the role of cash conversion cycle subject to retaining a significant control and
consistency also energise the objectivity of business and lead organisation to attain its desirable
goals and objective. It is reckoned that with feasible working requirement can be manageable by
conducting short term financial help from financial institutions and or banks (Baños-Caballero,
García-Teruel and Martínez-Solano, 2014).
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CONCLUSION
This has been concluded effect of working capital management over business
performance and profitability of company. From the above findings, it has been interpreted that
majority of respondents are aware about the impact of working capital management. Along with
this, different components of working capital management have been used but respondents said
money is main component as it effect on overall performance and profitability of company. In
addition, there are various factors of determining requirements of working capital such as length
of operating cycle, terms of credit, turnover of inventories and nature of production technology.
These factors have direct impact over profitability as well as performance of company. There are
various advantages got by company while management of working capital including higher
profitability, higher liquidity, favourable financing conditions and improved credit profile and
solvency. These benefits support banking sector by increasing its profitability ratio and
improving business performance at marketplace. Apart from this, there are various challenges
faced by company while management of working capital such as limited access to needed
information, lack of formal structure, time constraints and tool many stakeholders and
perspectives. These have negative impact on performance and profitability of company.
To manage or handle working capital within an organisation there are certain ways that
must be followed by company. It includes keeping working capital is everybody’s responsibility,
pay suppliers on time, control expenses carefully, watch their stock, consider introducing e-
procurement, talk to alternative lenders, emergency loans can be a short-term solution and
asset-based financing can be an asset. There are consider main recommendations which will help
an organisation in management of working capital and also enhancing its performance and
profitability. Thus, working capital management is important part of an organisation as it support
them in attainment of competitive advantages.
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Online
Strategic Report of Barclays. 2018. [online]. Available through:<
https://home.barclays/content/dam/home-barclays/documents/investor-relations/reports-
and-events/annual-reports/2018/barclays-plc-strategic-report-2018.pdf>.
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