Research Proposal: Working Capital Structure and Company Profitability

This research proposal investigates the effect of working capital structure on company profitability, focusing on companies like Tesco, Morrisons, and Sainsbury. It begins with an overview of working capital, its rationale, and the research's purpose, aiming to analyze the impact of working capital on company profitability and recommend measures for optimal management. The proposal outlines research questions concerning the importance of effective working capital, its administration, and its impact on profit margins. A literature review synthesizes viewpoints from various scholars on working capital's role in business operations, solvency, and profitability. The research employs an interpretivist philosophy with a qualitative approach, utilizing both primary and secondary data collection methods, including questionnaires and thematic analysis. Random sampling will be used with ethical considerations. The proposal includes a Gantt chart and a section on professional development skills gained through the research process. The research aims to provide a deeper understanding of working capital's influence on business success and financial performance.

Research Proposal

TABLE OF CONTENTS
Overview of the topic ..........................................................................................................................3
Rationale ..............................................................................................................................................3
Purpose and Objectives........................................................................................................................3
Aim..............................................................................................................................................3
Objectives....................................................................................................................................3
Research Questions..............................................................................................................................4
Literature Review.................................................................................................................................4
Research Methods................................................................................................................................5
Gantt Chart...........................................................................................................................................6
Professional and Career development skills.........................................................................................6
REFERENCES.....................................................................................................................................7

Research Title – Investigating effect of working working capital structure on the profitability of
company's
Overview of the topic
Working capital can be referred to as the amount of money which is available with company
for meeting day to day business operations. Management in an organisation need to manage flow
of working capital for maintaining effectiveness as well as efficiency of business. With the help of
business assets, aspects of the company's liquidity, solvency as well as financial position can be
measured. If company is having smooth working capital structure, then it will be able to conduct its
business operations in more cost effective manner which will in turn increases the profitability of
an enterprise. Venture capital assist in ascertaining firm ability to fulfil its obligations as due with
the help of current assets available.
Rationale
By undertaking this research study, many researcher as well as scholars will be able to gain deep
insight about the research topic. Further, it will help them in completing their research study with
better understanding and interpretation of data (Kumar, 2019). By making use of this research
project, one can have better information about working capital structure and its importance for
every business in accomplishing success and objectives. Also, the fact which has been clear from
this research project that by having an effective working capital structure in the business, it helps in
making high profit.
Purpose and Objectives
Aim
To analyse effect which the operative capital structure has on the company profitability. A study on
Tesco, Morrisons and Sainsbury
Objectives
 To analyse significance of working capital structure in context of business.
 To understand concept of administration of business assets and its procedures for
betterment of business growth
 To assess impact as made by artefact of working capital on business profitability level.

 To recommend measures for preventing overflow of working capital of an enterprise.
Research Questions
1. What is the importance of having effective working capital structure in the business ?
2. What is the concept behind administration of working capital and how it affects the
profitability aspect of a particular company ?
3. How artifact of working capital creates impact on level of profit margin of a business ?
4. What are the remedial measures with the help of which a company can brings improvement
in its working capital ?
Literature Review
As per the viewpoints of Aktas, Croci and Petmezas, (2015), working capital helps
company in running business operations in smooth and effective manner. With the help of proper
flow of capital in business. it helps in maintaining goodwill of the business in the competitive
marketplace. Also, it ensures that company is having enough cash with itself for paying off all its
business liability of current nature. By maintaining the structure of working capital, every business
organisation can have proper and sufficient amount of current assets with itself for future use. On
the contradictory note, Afrifa and Padachi, (2016) argued that if the company face difficulty in
managing working capital then it will result in increase in such level. By having excess working
capital, company will not get any kind of benefit as no interest will be earned by the company on
holding of such excess capital amount. It is required on the part of management of every business
organisation to maintain proper and adequate amount of working capital balance with itself for
remaining effective and efficient. By having excess capital amount, chances are there of spending it
in making purchase of unnecessary business assets thus increasing overall business cost thereby
reducing profitability as well.
According to Ramiah and et.al., (2016), the working capital of company is one of the most
important concept which helps in assessing the financial, liquidity as well as solvency position of
the company. By monitoring the flow of working capital in the business, it facilitates in enhancing
the overall profitability level thereby making efforts for reducing failures in the context of business
operations. Also, it ensures that proper and adequate cash resources is allocated in every business
department for performing smooth business operations. However Filbeck, Zhao and Knoll (2017)
disagrees by stating that management of working capital structure requires use of different
techniques for making ratio as well as data analysis. Mainly the amount of working capital is used
as a source of financing of long term projects of the company thus no focus is made on undertaking

of the financing activities of short term projects of crucial nature. In case if the company is not
having enough working capital with itself, then it can hamper its ability to cope up with the
emergency or contingent liabilities.
Research Methods
Research philosophy
A belief or manner in which data is required to be gathered and analysed by the researcher. Use of
Interpretivism philosophy will be done by researcher as it considers human interest for completing
whole study.
Research approach
A plan defining assumptions related to data collection, analysis process. It is having two types viz.
Inductive and Deductive. Inductive approach will be selected as it emphasises on deep observation
and theoretical frameworks.
Research type
Qualitative research type will be used by researcher as this study is related with the explanatory
research and focus is made on providing better understanding of the subject matter with the help of
formulation of hypotheses and ideas.
Data collection & analysis
Both the primary and secondary sources will be used by researcher for collecting relevant data
about subject matter. Furthermore, questionnaire will be prepared and utilized for assemblage of
information from twenty workers working at management position of each company (Silverman,
2016). Thus for making proper analysis of data researcher will use Thematic tool by formulating
different themes.
Sampling
Random sampling will be done by the researcher for getting adequate data. By selecting a small
portion of population as sample i.e. 20 managers of different company data will be collected
accordingly.
Ethical issues
All the ethical norms and standards will be complied by the researcher. Also, no copy and paste is
done in as it is manner. Rephrasing of full data gathered is done before using it in making of
research project. Also, consent form is filled in by all the respondents depicting about their willing
participation.

Gantt Chart
Professional as well as Career development skills
By Participating in investigation procedure, researcher would be able to learn many new concepts,
skills related to the facilitating research. By having adequate knowledge, it helps researcher in

searching and gathering of relevant as well as appropriate data in line with the research subject
matter. Also, concept related to the use of different methodologies about research has been
understand by researcher covering data analysis mechanisms as well.

REFERENCES
Books and Journals
Afrifa, G. A. and Padachi, K., 2016. Working capital level influence on SME profitability. Journal
of Small Business and Enterprise Development. 23(1). pp.44-63.
Aktas, N., Croci, E. and Petmezas, D., 2015. Is working capital management value-enhancing?
Evidence from firm performance and investments. Journal of Corporate Finance. 30. pp.98-
113.
Baños - Caballero, S., García - Teruel, P. J. and Martínez - Solano, P., 2016. Financing of working
capital requirement, financial flexibility and SME performance. Journal of Business
Economics and Management. 17(6). pp.1189-1204.
Bresler, L. and Stake, R. E., 2017. Qualitative research methodology in music education. In Critical
Essays in Music Education (pp. 113-128). Routledge.
Filbeck, G., Zhao, X. and Knoll, R., 2017. An analysis of working capital efficiency and
shareholder return. Review of Quantitative Finance and Accounting. 48(1). pp.265-288.
Kumar, R., 2019. Research methodology: A step-by-step guide for beginners. Sage Publications
Limited.
Ramiah, V and et.al., 2016. A behavioural finance approach to working capital management. The
European Journal of Finance. 22(8-9). pp.662-687.
Silverman, D. ed., 2016. Qualitative research. Sage.
Online
Research type – qualitative and quantitative. 2019. [online]. Available through:
<https://www.snapsurveys.com/blog/qualitative-vs-quantitative-research>.