The impact of working capital management on shareholder returns is not always direct or straightforward. In some cases, an increase in working capital may lead to higher returns for shareholders, as it can lead to more efficient operations, increased profitability, and better access to capital. On the other hand, an overly conservative approach to managing working capital can lead to a decrease in returns, as it may limit the company’s ability to capitalize on opportunities.
It is important to note that working capital management is only one of several factors that can influence shareholder returns. Other factors such as corporate governance, competitive strategy, industry dynamics, and the macroeconomic environment can also play a role. As such, effective working capital management should be seen as part of an overall strategy to maximize shareholder value.
Department of Management Science
Preston University
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