Impact of  Employee Turnover on Firm Profitability

Employee turnover, or the rate at which employees leave an organization and are replaced by new hires, can have a significant impact on a firm's profitability. High employee turnover can lead to a number of negative consequences, including increased costs associated with recruiting and training new employees (Mobley, 1982), decreased productivity and morale among remaining staff (Price & Mueller, 1986), and a loss of institutional knowledge and expertise (Price, 1977). These factors can ultimately lead to decreased profitability for the firm.

On the other hand, low employee turnover can have a positive impact on a firm's profitability. Companies with low turnover tend to have lower recruitment and training costs (Price & Mueller, 1986), as well as higher productivity and morale among their employees (Price, 1977). These factors can contribute to increased profitability for the firm.

There are several factors that can contribute to high employee turnover, including a poor work environment (Mobley, 1982), a lack of opportunities for growth and advancement (Price & Mueller, 1986), and low pay and benefits (Price, 1977). Companies can take steps to reduce employee turnover by improving working conditions (Price, 1977), offering training and development opportunities (Price & Mueller, 1986), and providing competitive pay and benefits packages (Mobley, 1982).

Overall, the impact of employee turnover on firm profitability is significant, and companies should strive to minimize turnover in order to maximize profitability and maintain a stable and productive workforce.

References:

Mobley, W. H. (1982). Employee turnover: Causes, consequences, and control. Reading, MA: Addison-Wesley.

Price, J. L. (1977). The study of turnover. Ames: Iowa State University Press.

Price, J. L., & Mueller, C. W. (1986). Turnover: Causes, consequences, and control. San Francisco, CA: Jossey-Bass.

Ahsan Tariq
Preston university
Department of management science

 The role of human resources (HR) in working capital management

The role of human resources (HR) in working capital management is to ensure that the company has the necessary talent and resources to support its operations and meet its financial obligations. 

HR can play a key role in working capital management by:

1. Attracting and retaining top talent: 

  HR plays a vital role in attracting and retaining top talent, as a skilled and motivated workforce is essential for the efficient operation of the business. By implementing effective recruitment and retention strategies, HR can help to ensure that the company has the necessary personnel to support its operations and meet its financial obligations.

2. Managing employee performance: 

  HR can also play a role in managing employee performance, which can impact the company's working capital. By setting clear performance goals and providing ongoing feedback and support, HR can help to ensure that employees are productive and contributing to the success of the business.

3. Managing employee benefits and compensation:

  HR is also responsible for managing employee benefits and compensation, which can have a significant impact on the company's working capital. By negotiating favorable benefit and compensation packages, HR can help to minimize the company's expenses and improve its cash flow.

4. Ensuring compliance with labor laws and regulations: 

  HR is also responsible for ensuring compliance with labor laws and regulations, which can have an impact on the company's working capital. By staying up-to-date on relevant laws and regulations and implementing effective compliance policies, HR can help to minimize the risk of financial penalties and other negative consequences.

Overall, the role of HR in working capital management is to ensure that the company has the necessary talent and resources to support its operations and meet its financial obligations. By effectively managing the human capital of the organization, HR can help to optimize the company's working capital and contribute to its financial success.

Ahsan Tariq
Preston university
Department of management science

 

Working Capital Management (WCM)

Introduction:

Working capital management is the process of managing a company's short-term assets and liabilities in order to ensure the smooth operation of the business. It is a crucial aspect of financial management that involves the proper management of a company's current assets, such as cash, accounts receivable, and inventory, as well as its current liabilities, such as accounts payable and short-term debt. Effective working capital management is essential for the financial health and success of any business, as it helps to ensure that the company has sufficient resources to meet its short-term obligations and take advantage of opportunities as they arise.

The Importance of Working Capital Management:

Working capital management is particularly important for small businesses, which often have limited access to capital and may struggle to meet their short-term financial obligations. By carefully managing their working capital, small businesses can improve their cash flow, reduce their risk of financial distress, and increase their chances of success.

Effective working capital management can also benefit larger businesses. By maintaining a healthy balance of short-term assets and liabilities, companies can reduce the risk of financial instability and improve their ability to respond to changing market conditions. In addition, efficient working capital management can help companies to reduce their financing costs, as they may be able to negotiate more favorable terms with lenders.

Factors Affecting Working Capital Management:

There are several factors that can impact a company's working capital management, including the level of business activity, the efficiency of the company's operations, and the timing of its cash flows. 

For example, a company with high levels of business activity may require a larger amount of working capital to fund its operations, while a company with efficient operations may be able to operate with a smaller working capital balance. The timing of cash flows can also affect working capital management, as companies may need to increase their working capital in anticipation of future cash outflows, such as the payment of taxes or the settlement of accounts payable.

Tools and Techniques for Managing Working Capital:

There are several tools and techniques that companies can use to manage their working capital, including:

Cash management: 

This involves techniques such as maximizing the use of available cash, optimizing the timing of cash inflows and outflows, and reducing unnecessary expenses.

Inventory management: 

This involves techniques such as reducing inventory levels, improving the accuracy of demand forecasting, and implementing just-in-time inventory systems.

Accounts receivable management: 

This involves techniques such as improving the efficiency of the billing and collection process, offering incentives for early payment, and implementing credit policies to reduce the risk of default.

Accounts payable management: 

This involves techniques such as negotiating longer payment terms with suppliers, making timely payments to take advantage of early payment discounts, and implementing vendor management programs.

Conclusion:

Working capital management is a critical aspect of financial management that is essential for the success of any business. By effectively managing their short-term assets and liabilities, companies can improve their cash flow, reduce their risk of financial distress, and increase their chances of success. Through the use of various tools and techniques, companies can optimize their working capital management and ensure that they have the resources they need to meet their short-term obligations and take advantage of opportunities as they arise.

Ahsan Tariq
Preston university
Department of management science

General information about working capital techniques and how they are used to manage a company's short-term financial resources

Working capital refers to the capital a business has available for its daily operations. It is the difference between a company's current assets and its current liabilities. Current assets include cash, accounts receivable, and inventory, while current liabilities include accounts payable, short-term debt, and other debts that are due within one year.

There are several techniques that companies can use to manage their working capital, including:

Managing accounts receivable: 

This involves setting credit policies, monitoring payment patterns, and taking steps to speed up the collection of outstanding payments.

Managing inventory: 

This involves controlling the level of inventory, ensuring that it is being used efficiently, and minimizing waste.

Managing accounts payable: 

This involves negotiating favorable payment terms with suppliers, making timely payments, and taking advantage of early payment discounts when possible.

Managing cash flow: 

This involves forecasting future cash needs and making sure that there are sufficient funds available to meet those needs.

By effectively managing their working capital, companies can improve their financial performance and increase their ability to meet short-term obligations.

Ahsan Tariq
Preston university
Department of management science

The future of Working Capital Management: The predictions for 2023 and beyond

It is difficult to make specific predictions about the future of working capital management, as it is affected by a variety of internal and external factors. 

However, here are a few possible trends that could shape the future of working capital management:

Increased focus on digitalization: 

The use of digital technologies, such as blockchain and artificial intelligence, is likely to continue to grow in the field of working capital management. These technologies can help improve efficiency, reduce errors, and provide greater visibility into the working capital management process.

Greater emphasis on sustainability: 

As concerns about the environment and social responsibility continue to rise, companies may place a greater emphasis on sustainable practices in their working capital management. This could involve using more environmentally-friendly suppliers, reducing waste, and optimizing inventory levels to minimize waste.

Continued impact of global events: 

The COVID-19 pandemic has had a significant impact on working capital management, and similar global events could continue to shape the field in the future. Companies may need to be more agile and adaptable in their working capital management in order to respond to unexpected events.

Increased use of data analytics: 

The growing availability of data and the development of advanced analytics tools are likely to lead to an increased use of data in working capital management. Companies may use data to make more informed decisions about inventory levels, payment terms, and other aspects of working capital management.

Overall, the future of working capital management is likely to be shaped by a combination of technological advancements, changing global economic conditions, and a focus on sustainability and social responsibility.

Ahsan Tariq
Preston university
Department of management science

Tips for managing stress at work

Stress is a common problem in the workplace, and it can have negative impacts on both our mental and physical health. In fact, according to the World Health Organization, stress is the leading cause of sick leave in the world. Managing stress in the workplace is essential for maintaining productivity and well-being.

Here are some tips for managing stress at work:

Identify the sources of your stress: 

The first step in managing stress is to understand what is causing it. Take some time to reflect on the things that trigger your stress and how they affect you. This may involve identifying specific tasks or responsibilities that are causing you stress, or it may involve identifying broader issues like work-life balance or a toxic work environment.

Communicate with your boss and coworkers: 

If you are experiencing stress at work, it is important to communicate with your boss and coworkers about your concerns. They may be able to provide support or make changes to help reduce your stress.

Set boundaries: 

Establishing clear boundaries between work and personal life can help reduce stress. This may involve setting limits on how much work you are willing to take on, or it may involve setting aside specific times for work and leisure.

Take breaks: 

Taking breaks from work can help reduce stress and improve productivity. Consider taking short breaks throughout the day to stretch, walk, or meditate.

Practice relaxation techniques: 

There are several relaxation techniques that can help reduce stress, such as deep breathing, meditation, or progressive muscle relaxation. Find one that works for you and make it a part of your daily routine.

Seek professional help: 

If you are struggling to manage your stress on your own, consider seeking help from a mental health professional. They can provide you with tools and strategies to better cope with stress and improve your overall well-being.

Managing stress in the workplace is essential for maintaining productivity and well-being. By identifying the sources of your stress, communicating with your boss and coworkers, setting boundaries, taking breaks, and practicing relaxation techniques, you can better manage stress and improve your overall well-being.

Ahsan Tariq
Preston university
Department of management science

Human resource management (HRM) policies are guidelines

Human resource management (HRM) policies are guidelines, procedures, and rules that a company or organization puts in place to ensure that its HR practices and processes are fair, consistent, and in line with its goals and values. These policies can cover a wide range of topics, including hiring, training, performance management, compensation, benefits, and work-life balance.

Effective HRM policies are important because they help to create a positive and productive work environment, and they can contribute to the overall success of an organization. They can also help to protect the rights and interests of both the company and its employees, and to ensure compliance with labor laws and other regulations.

There are several key components that should be considered when developing HRM policies. These include:

Aligning the policies with the organization's mission, vision, and values: 

HRM policies should be consistent with the overall goals and culture of the organization, and should support the development of a positive and inclusive work environment.

Ensuring legal compliance: 

HRM policies should be designed to ensure compliance with all relevant labor laws and regulations, including those related to discrimination, harassment, and equal opportunity.

Providing clear guidance and expectations: 

HRM policies should be clearly written and easily understood by all employees. They should provide clear guidance on how to handle specific HR-related issues, and should outline the consequences of non-compliance.

Encouraging open communication: 

HRM policies should encourage open and transparent communication between employees and management, and should provide clear channels for employees to raise concerns or ask questions.

Promoting fairness and equality: 

HRM policies should be designed to promote fairness and equality in the workplace, and should not discriminate against any employee on the basis of their race, gender, age, religion, or any other protected characteristic.

In summary, HRM policies play a critical role in shaping the culture and practices of an organization, and they can have a significant impact on employee satisfaction and performance. By carefully considering these and other key factors, organizations can develop effective HRM policies that support their overall goals and values, and contribute to their success.

Ahsan Tariq
Department of Management Science 
Preston University

Working capital management Strategies

Working capital management refers to the management of a company's short-term financial resources, including cash, accounts receivable, inventory, and accounts payable. It is an important aspect of financial management, as it affects a company's ability to meet its short-term obligations, maintain an adequate level of liquidity, and operate efficiently.

There are several strategies that companies can use to manage their working capital effectively. These strategies include:

Managing accounts receivable: 

This involves setting payment terms and policies, monitoring customer payment patterns, and using tools such as factoring or invoice financing to manage the flow of cash in and out of the company.

Managing inventory: 

This involves optimizing inventory levels to ensure that the company has enough stock to meet demand, but not so much that it ties up excess capital.

Managing accounts payable: 

This involves negotiating favorable payment terms with suppliers and using tools such as supply chain finance to manage the flow of cash in and out of the company.

Managing cash: 

This involves forecasting cash needs, managing cash balances, and using tools such as short-term borrowing or cash management accounts to manage the flow of cash in and out of the company.

Overall, effective working capital management is critical for the success of any business. It allows companies to meet their short-term financial obligations, maintain an adequate level of liquidity, and operate efficiently.

Ahsan Tariq

Department of Management Science 

Preston University

Managing Working Capital

1. Cash Conversion Cycle Management: 

This approach focuses on minimizing the amount of time that inventory, accounts receivable, and accounts payable are outstanding, thereby reducing the amount of working capital required. 

2. Supply Chain Management: 

This approach involves managing relationships with suppliers and customers to optimize inventory levels, terms, and payment cycles. 

3. Just-in-Time Inventory Management: 

This approach focuses on having just the right amount of inventory on hand at any given time to meet customer needs without wasting resources. 

4. Capital Structure Optimization: 

This approach focuses on the optimal mix of debt and equity to fund operations and maximize returns. 

5. Working Capital Financing: 

This approach involves using debt, equity, and other financial instruments to fund working capital needs. 

6. Credit Management: 

This approach involves managing customer credit terms and payment cycles to maximize cash flow. 

7. Risk Management:

 This approach involves mitigating operational and financial risks associated with working capital management.

These are all approaches that can be used to manage working capital, which refers to the short-term assets and liabilities that a company has in order to fund its daily operations. By effectively managing working capital, a company can increase its financial flexibility and improve its ability to meet its financial obligations.

Cash Conversion Cycle Management: 

This approach involves reducing the time it takes for a company to convert its resources (such as raw materials and labor) into cash through the sale of finished goods. By minimizing the amount of time that inventory, accounts receivable, and accounts payable are outstanding, a company can reduce the amount of working capital it needs to fund its operations.

Supply Chain Management:

 This approach involves managing relationships with suppliers and customers to optimize inventory levels, terms, and payment cycles. By working closely with suppliers, a company can negotiate longer payment terms, which can help to reduce the amount of working capital it needs to fund its operations. Similarly, by offering favorable credit terms to customers, a company can increase its sales and improve its cash flow.

Just-in-Time Inventory Management:

 This approach involves having just the right amount of inventory on hand at any given time to meet customer needs without wasting resources. By minimizing inventory levels, a company can reduce the amount of working capital it needs to fund its operations.

Capital Structure Optimization: 

This approach involves finding the optimal mix of debt and equity to fund a company's operations and maximize returns. By balancing the use of debt and equity, a company can increase its financial flexibility and reduce the amount of working capital it needs to fund its operations.

Working Capital Financing: 

This approach involves using debt, equity, and other financial instruments to fund working capital needs. By securing additional funding, a company can increase its financial flexibility and improve its ability to meet its financial obligations.

Credit Management: 

This approach involves managing customer credit terms and payment cycles to maximize cash flow. By setting clear payment terms and enforcing them consistently, a company can improve its cash flow and reduce the amount of working capital it needs to fund its operations.

Risk Management: 

This approach involves identifying and mitigating operational and financial risks associated with working capital management. By identifying potential risks and developing strategies to mitigate them, a company can increase its financial stability and reduce the impact of unexpected events on its working capital.

Ahsan Tariq
Department of Management Science 
Preston University

The impact of working capital management on shareholder returns

 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.

Ahsan Tariq
Department of Management Science 
Preston University

Reg#114118

Article on Working Capital Management approach and which one is best in hospital industry

 Working capital management is an important aspect of a hospital's financial health. The goal of working capital management is to ensure that the hospital has enough cash on hand to cover its daily operations and pay its bills. It is important for hospitals to manage their working capital in order to maintain financial stability and growth.

The two main approaches to working capital management are the traditional approach and the dynamic approach. 

The traditional approach to working capital management focuses on the working capital ratio. This ratio is calculated by dividing current assets by current liabilities. A healthy working capital ratio is typically between 1 and 2. A ratio that is too low indicates that the hospital may not have enough cash on hand to pay its bills and may be at risk of insolvency. A ratio that is too high indicates that the hospital may have too much cash on hand and may be missing out on potential investment opportunities.

The dynamic approach to working capital management takes into account the changing needs of the hospital. This approach involves adjusting the working capital ratio to match the current and future needs of the hospital. This can be done by managing the current assets and liabilities more effectively. For example, the hospital may choose to invest more in short-term investments or may adjust its inventory levels to better match.

Ahsan Tariq
Department of Management Science 
Preston University

Seven different approaches to working capital management

 1. Cash Conversion Cycle Management:

This approach focuses on minimizing the amount of time that inventory, accounts receivable, and accounts payable are outstanding, thereby reducing the amount of working capital required. 

2. Supply Chain Management: 

This approach involves managing relationships with suppliers and customers to optimize inventory levels, terms, and payment cycles. 

3. Just-in-Time Inventory Management: 

This approach focuses on having just the right amount of inventory on hand at any given time to meet customer needs without wasting resources. 

4. Capital Structure Optimization: 

This approach focuses on the optimal mix of debt and equity to fund operations and maximize returns. 

5. Working Capital Financing: 

This approach involves using debt, equity, and other financial instruments to fund working capital needs. 

6. Credit Management: 

This approach involves managing customer credit terms and payment cycles to maximize cash flow. 

7. Risk Management: 

This approach involves mitigating operational and financial risks associated with working capital Management.

Ahsan Tariq
Department of Management Science 
Preston University

Article on working capital management approach and which one is best in hospital industry

Working capital management is an important aspect of any business, and it is especially important in the hospital industry. Hospitals must have sufficient working capital to pay bills, purchase supplies, and provide care to patients. Without adequate working capital, hospitals may not be able to adequately serve patients and may be forced to close. 

There are several different approaches to working capital management, and each hospital should choose the approach that best fits their needs. The goal of any approach is to ensure that the hospital has enough funds to cover its current expenses without depleting its future resources. 

One approach to managing working capital is to maintain a fixed pool of capital. This approach requires the hospital to set aside a certain amount of money in the form of cash or other liquid assets to cover its current expenses. This approach works best for hospitals that have a predictable level of expenses and cash flow. The downside to this approach is that it can be difficult to adjust the amount of capital in the pool if expenses or cash flow changes. 

Another approach to working capital management is to use a ratio-based approach. This approach requires the hospital to maintain a certain ratio of current assets to current liabilities. The ratio is usually set based on the hospital's cash flow and expenses.This approach allows the hospital to be more flexible in its use of working capital, as it can adjust the ratio based on changes in expenses and cash flow. However, it can be more difficult to determine the appropriate ratio for a hospital, as it requires forecasting and analysis of the hospital's financial performance.

A third approach to working capital management is to use a cash flow forecast. This approach involves forecasting the hospital's future cash needs and then taking action to ensure that sufficient funds are available to meet those needs. This approach can be more proactive and allows the hospital to anticipate and prepare for changes in expenses and cash flow. However, it can be more time-consuming and may require the hospital to have strong financial forecasting capabilities.

Regardless of the approach used, it is important for hospitals to monitor their working capital and make adjustments as needed to ensure that they have sufficient funds to meet their current expenses and provide the best possible care to their patients.

Ahsan Tariq
Department of Management Science 
Preston University

Research article on "Impact of working capital management approach on profitability of organization" A Case study of hospital industry in Pakistan

 Abstract

This research article aims to examine the impact of working capital management approach on profitability of hospitals in Pakistan. The study is based on a survey of 186 hospitals in Pakistan. The results indicate that working capital management is significantly associated with the profitability of hospitals in Pakistan. The findings also suggest that cash management, inventory management, accounts receivable management and accounts payable management are the major components of working capital management that have a positive influence on profitability. The results of this study can assist hospital management in making decisions regarding working capital management and can help them to improve their financial performance.

Introduction

Healthcare organizations have become increasingly important in today’s world. Hospitals are one of the most important components of the healthcare industry. In Pakistan, the healthcare sector is growing rapidly and hospitals play an important role in providing quality healthcare services to the population. The hospital industry is highly competitive and there is an increasing demand for efficient and effective management of resources. Working capital management is one of the most important aspects of managing resources in hospitals. Working capital management involves managing short-term assets and liabilities in order to improve the efficiency and profitability of the organization.

In this study, the impact of working capital management on the profitability of hospitals in Pakistan is examined.

Methodology

The study is based on a survey of 186 hospitals in Pakistan. The data was collected through a structured questionnaire that was administered to the hospital managers. The questionnaire was designed to collect information on the hospital’s working capital management practices and its financial performance. The financial performance of the hospitals was measured using profitability ratios, such as return on assets (ROA) and return on equity (ROE).

The data was analyzed using statistical techniques, including correlation and regression analysis. The results were used to examine the relationship between working capital management and profitability.

Results

The results of the study indicate that working capital management is significantly associated with the profitability of hospitals in Pakistan. The findings show that cash management, inventory management, accounts receivable management, and accounts payable management are the major components of working capital management that have a positive influence on profitability.

Conclusion

The results of this study suggest that effective working capital management can improve the financial performance of hospitals in Pakistan. The findings of this study can assist hospital management in making decisions regarding working capital management and can help them to improve their financial performance. Hospital managers can use the results of this study to develop strategies for improving their working capital management practices and increasing their profitability.

Ahsan Tariq
Department of Management Science 
Preston University