Working Capital Management Impact

This project examines the impact of working capital management on the profitability of UK retail firms, specifically Morrison's, Sainsbury's, and Tesco Plc. It utilizes quantitative research methods to analyze data from financial statements and assess the relationship between working capital components and profitability. The study aims to provide recommendations for effective working capital management strategies to enhance profitability in the retail sector.

EMPIRICAL FINANCE AND
ACCOUNTING RESEARCH
METHODS

ABSTRACT
The working capital management is combination of short term liabilities and asset are
very crucial for producing margin in any business sector as they are given huge priorities through
corporate world. The business unit which are using components of working capital in effective
manner are having huge possibilities to attain competitive edge over its competitors. The main
objective of this research is to asses relationship of components of working capital management
and profitability in UK retail sector with context of Morrison, Tesco and Sainsbury Plc. In this
study, there will be implication of statistical tool such as Excel and SPSS to attain its objective.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Background ................................................................................................................................1
Research aim and objectives ......................................................................................................1
Research questions......................................................................................................................2
Significance of research .............................................................................................................2
RESEARCH METHODOLOGY.....................................................................................................2
Research type..............................................................................................................................2
Research approach......................................................................................................................3
Research philosophy...................................................................................................................3
Data Collection...........................................................................................................................3
Data Analysis..............................................................................................................................4
RESEARCH ETHICS......................................................................................................................4
TIMESCALE...................................................................................................................................4
RESOURCES..................................................................................................................................6
REFERENCES................................................................................................................................7

Research topic: To assess the impact of working capital management on the profitability of
UK retail sector: A study on Morrison’s, Sainsbury and Tesco Plc
INTRODUCTION
Background
In the present scenario, extracting balance among liquidity and profitability tends to be
huge challenge for manager of organization who is struggling with its management. In this
aspect, emergence of working capital management is very crucial for finance and accounting as
it is directly associated to financing and investing in short term perspective. The combination of
current liabilities and asset is known as working capital where marketable securities, inventories,
cash and receivables are included in current asset. However, all short term obligations which
organization has to repay are considered in current liabilities. In simple words, it is referred to
strategies and decision of management which are directly adopted through organizations for
dealing with issues for management of working capital to influence effectiveness and size of
organization (Shah, Gujar and Sohu, 2018).
Basically, it helps in managing current assets and liabilities in efficient aspect by giving
the firm as maximum possible return. It could be elaborated as management of short term capital
with objective of organization's profitability along with its growth value. Generally, it has
positive outcome of business unit's liquidity and profitability with perfect level of liquidity helps
in attaining short term obligations. Henceforth, efficient working capital management should be
very easy for purpose of accessing with appropriate synchronization among clients and suppliers
by considering regular operations (Masri and Abdulla, 2018). Thus, efficient working capital
management in undergoes via perfect management of component of working capital like
payables, inventory, receivable and implication of cash for regular business operations, as it is
main objective for maximising possible revenues. So in this context, this research will provide
information about working capital management impact on profitability related to UK retail sector
on basis of Sainsbury, Morrison and Tesco Plc.
Research aim and objectives
Aim: The main behind initiating current study is to ascertain the influence of working
capital management aspects on the profitability of firms like Morrison, Sainsbury and Tesco Plc
Objectives: On the basis of above aim following objectives has been drafted by scholar
such as:
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 To develop understanding about the theories and models of working capital management.
 To assess factors that affect working capital management within UK retail sector.
 To ascertain relationship between working capital and profitability of UK retail sector.
 To recommend ways that contributes in effectual working capital management and
thereby enhances profitability of firms.
Research questions
For conducting study in an appropriate manner research questions have been framed as
per the objectives drafted above such as:
Q.1 What is the significance of working capital management in the context of UK retail firms?
Q.2 Does working capital management impact profitability of UK retail firms?
Significance of research
This research is related to impact of working capital on profitability factor in retail
industry. It has presence of special significance for purpose of different planning and operational
issues in their business and industry as well. As this is highly concerned with both knowledge
and own sake as well to contribute about practical concerns. It will also help Morrison’s,
Sainsbury and Tesco Plc for identifying issues with its solutions and for purpose of financial
performance along with managing working capital with appropriate balance.
In the similar aspect, it will help student who writes Ph.D's and master thesis, research
might mean a careerism or mode for attaining best position. It might be source of livelihood to
various professionals in research methodology. Furthermore, it will be useful for thinkers and
philosophers, this research might signify outlet for new insights and idea and literary women and
men for development of innovative styles and creative work. Thus, it is important for other
intellectuals and analysts, where research might mean for generalizing new theories.
RESEARCH METHODOLOGY
Research type
The methods of research are categorised widely in qualitative and quantitative where
qualitative directly seeks for answering questions about behaviour of people. In simple words, it
gives in-depth information on basis of human behaviour (Franssen and et.al., 2018). Further,
quantitative research helps in providing phenomena through gathering numerical data which is
analysed in mathematical bases methods. With this context, there will be application of
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quantitative research and there is huge range of statistical techniques with availability with
purpose of analysing through simple graphs. Generally, these graphs helps in reflecting data via
test of correlation among correlation, statistical significance and many other techniques. Thus,
there is assessment of working capital management which will impact profitability of retail firm
of UK with quantitative research.
Research approach
There are two types of research approach such as inductive and deductive. With context
to inductive approach, relevant data has been gathered and data pattern is observed and then
theory has been developed for explaining this pattern (Mohr, Riper and Schueller, 2018). In the
similar aspect, deductive approach begins with social theory and then implications will be
undertaken. Furthermore, the impact of managing working capital on data of profitability there
will be use of deductive approach to attain objective of research.
Research philosophy
Interpretivism and positivism are considered as two basic approach of research
philosophy. Quantitative methods are preferred through positivists whereas humanistic
qualitative methods are associated with interpretivists (Ryan, 2018). With reference to
interpretivism, it uses multiple methods like participant observation or with unstructured
interview. On the contrary, positivism is linked with structured questionnaires along with official
statistics due to good representativeness and good reliability. In order to this, in this study there
will be implication of positivism philosophy will be directly employed through researcher for
accomplishing research objectives.
Data Collection
This is replicated as process of measuring and gathering information with context of
targeted variables in any established system, which helps in enabling for answering relevant
research question and with perspective of evaluating outcome. Basically, data could be collected
via primary or secondary sources of data. Primary data is also known as raw data as it is obtained
through first hand sources with mode of experimentation, observation and surveys (Levine and
et.al., 2018). As it is not subjected for purpose of manipulation and processing is replicated as
primary data. However, data collected through any other person instead of user where the
availability of data has and analysed by researcher. The data on basis of profitability and
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liquidity would be gathered with secondary sources of data like profit and loss statement, balance
sheet and other financial statements as well for selected business unit.
Data Analysis
It is considered as process of cleansing, modelling, inspecting and transform data with
objective of discovering relevant information, supporting decision making and to inform
conclusions. There are various tools for purpose of analysing quantitative data such as excel
which helps in thematic analysis, SPSS for descriptive statistics and correlation and in this study,
it will imply SPSS for attaining objectives by researcher.
RESEARCH ETHICS
The research which engages human subjects and individual raises complex and unique
legal, political, ethical and social issues. Generally, research ethics is highly interested for
purpose of analysing ethical issues raised when individual or there important information is used
in research. This paper is fully based on gathering secondary data through financial platform and
public domain such as annual reports along with financial statements. The only issue has been
arises through this research is honesty of author for giving fair and unchanged outcome of
intended findings. The most crucial part of interpretation, selection and application of data is
performed in excel program (Five principles for research ethics, 2019).
TIMESCALE
The essential thing of each type of research is considered as planning and appropriate
time scaling of activities are stated below:
Activities /
weeks
1 2 3 4 5 6 7 8 9 10 11 12
Selection of
research topic
and drafting aim
and objectives as
per the issue
Making proposal
Evaluation of
secondary data
gathered through
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books, journals
and scholarly
articles
pertaining to
WCM
Collection of
quantitative data
from the annual
reports of
concerned retail
firms
Identifying
research tools
and techniques
Analysing
gathered data set
by applying
SPSS tools
Discussion of
findings derived
Drawing
conclusion and
giving
recommendation
s
Doing proper
formatting as per
academic
standards
Taking feedback
and doing
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modifications
Final submission
RESOURCES
The resources for research are secondary sources such as textbooks, scholarly journal
article and very important is financial statement of Morrison’s, Sainsbury and Tesco Plc for
extracting data about profitability, current asset and current liabilities. There is absence of money
expenses on basis of researchers as it is all about time for investing in this research project.
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REFERENCES
Books and Journals
Franssen, T. and et.al., 2018. The Drawbacks of Project Funding for Epistemic Innovation:
Comparing Institutional Affordances and Constraints of Different Types of Research
Funding. Minerva. 56(1). pp.11-33.
Levine, S. and et.al., 2018. Learning hand-eye coordination for robotic grasping with deep
learning and large-scale data collection. The International Journal of Robotics
Research. 37(4-5). pp.421-436.
Masri, H. and Abdulla, Y., 2018. A multiple objective stochastic programming model for
working capital management. Technological Forecasting and Social Change. 131. pp.141-
146.
Mohr, D. C., Riper, H. and Schueller, S. M., 2018. A solution-focused research approach to
achieve an implementable revolution in digital mental health. JAMA psychiatry. 75(2).
pp.113-114.
Ryan, G., 2018. Introduction to positivism, interpretivism and critical theory. Nurse
researcher. 25(4). pp.14-20.
Shah, B., Gujar, M. A. and Sohu, N. U., 2018. The impact of working capital management on
profitability: case study of pharmaceutical and chemical firms listed on Karachi stock
exchange. International Journal of Economics, Commerce and Management. 6(3). pp.200-
220.
Online
Five principles for research ethics. 2019. [Online]. Available through
<https://www.apa.org/monitor/jan03/principles.aspx>.
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