Their findings suggest that there is a negative relationship between working capital and firm performance. argue that the firms with higher profits are not motivated to manage working capital and firm performance.

From this view, authors such as Shin et al.

Firms characterized by high working capital display high sensitivities of investment in working capital to cash flow and low sensitivities of investment in fixed capital to cash flow. The second view suggests that firms with higher working capital levels may face additional financing expenses which increase their probability of going bankrupt. suggest that working capital decisions affect firm performance significantly and find that firms with higher values hold a significantly higher investment in working capital than firms with lower values. Working capital management plays a significant role in the better performance of manufacturing firms. Under one view, higher working capital levels allow firms to increase their sales and obtain greater discounts for early payments and, hence, may increase firms' value. Studies on working capital management since Frecka fall into three competing views. The current assets, current liabilities, cash flow, and working capital policy derived from working capital have been examined primarily for their impact on a firm's value. Since Smith, working capital has been discussed in holistic terms. Working capital and strategic choices are two concepts that have been widely discussed because they impact many aspects of business and financial management. This effect is finally transferred to influence the relationship between working capital configuration and operational performance. The empirical results suggest that working capital is configured and adjusted to its target in different ways under different competitive strategic choices. Using the panel data of the listed companies of the wholesale and retail industry as our sample, we analyze the differences in the ways companies configure working capital, the speed with which working capital adjusts to its target, and the effects of working capital on performance for companies that make different strategic choices. By clustering the strategic factors of the wholesale and retail industry, we find three categories of strategies: terminal market strategy, middle market strategy, and hybrid strategy. We examine the influence of strategic choice on working capital configurations and observe how the relationship between working capital ratio and operational performance differs depending on strategy.

Net working capital turnover example