Quest for optimal working capital : The Case of FK RASZTER Building Inc.
Kalmár, László (2016)
Tampereen ammattikorkeakoulu
2016
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2016120218738
https://urn.fi/URN:NBN:fi:amk-2016120218738
Tiivistelmä
This thesis was commissioned by FK RASZTER Building Inc. seeking optimal short-term financial management that improves net profitability. Therefore, the purpose of the study was to gather information on the organization`s current short-term financial management processes, to develop an efficient model of working capital management, with respect to the organizational strategy.
The data was collected by semi-structured depth interviews, with eleven strategically selected experts of RASZTER`s personnel, and by analyzing the balance sheets and the income statements of the organization from 2008 to 2015. The data was processed into a set of development proposals, by using SWOT analysis to interpret the data.
The research results showed that FK RASZTER Building Inc. is over capitalized with excess cash reserves holding high opportunity costs, due to the organization`s conservative strategy. The findings indicated that a shift from a defensive working capital policy to a neutral policy would best facilitate an efficient working capital management along with the organization` low risk strategy. The research analysis has indicated the integration of short-term loans to the financing structure of the organization, and a reduced conversion cycle of tied down cash and cash equivalents. The implementation of the development proposal is expected to increase the efficiency of the overall working capital management of the commissioner organization, ensuring smooth flow of operations under fluctuating economic circumstances.
Considerably, further research would allow the investigation of the working capital management and profitability correlation, or a benchmark analysis of FK RASZTER Building Inc. with other organizations, in an industry wide research. Furthermore, inventory specific studies of FK RASZTER Building Inc. would also benefit the operational processes of the organization, which were excluded from the current thesis research.
The data was collected by semi-structured depth interviews, with eleven strategically selected experts of RASZTER`s personnel, and by analyzing the balance sheets and the income statements of the organization from 2008 to 2015. The data was processed into a set of development proposals, by using SWOT analysis to interpret the data.
The research results showed that FK RASZTER Building Inc. is over capitalized with excess cash reserves holding high opportunity costs, due to the organization`s conservative strategy. The findings indicated that a shift from a defensive working capital policy to a neutral policy would best facilitate an efficient working capital management along with the organization` low risk strategy. The research analysis has indicated the integration of short-term loans to the financing structure of the organization, and a reduced conversion cycle of tied down cash and cash equivalents. The implementation of the development proposal is expected to increase the efficiency of the overall working capital management of the commissioner organization, ensuring smooth flow of operations under fluctuating economic circumstances.
Considerably, further research would allow the investigation of the working capital management and profitability correlation, or a benchmark analysis of FK RASZTER Building Inc. with other organizations, in an industry wide research. Furthermore, inventory specific studies of FK RASZTER Building Inc. would also benefit the operational processes of the organization, which were excluded from the current thesis research.