THIS IS AN ESSAY, MY FOCUS IS ON WORKING CAPITAL AN IT'S IMPACT ON ORGANIZATIONAL PERFORMANCE.

THANKS

DRAFT Financial Management Practices and Their Impact on Organizational Performance - Your essay should critically asses the relationship between organizational performance and financial management practices. These include capital structure decision, investment appraisal techniques, dividend policy, working capital management and financial performance assessment. Be based on your reading and research relevant to the topic. Be 5 to 6 double-spaced pages, plus appendices, exhibits, and references. Include a one-page Executive Summary immediately following the title page that includes a statement of the major issue(s) and your conclusions and specific recommendations. The content of an Executive Summary is similar to an abstract. I WANTED TO USE WALMART AS A CASE STUDY THANKS Abstract This paper investigates financial management practices and their impact on organizational performance. All organizations formed intend to succeed, however in this highly innovative and with the increase of technological advancements, ever changing customer and investor demands, product market competition, it can be challenging to meet target goals. In order to compete successfully, organizations will have to improve their performance by being cost efficient, developing innovative products and processes, and improving quality to stay ahead of the competition. To improve performance, organizations employ a variety of management and financial principles to achieve organizational performance. This paper critically assess the use of working capital and its impact on organizational performance. Efficient working capital management can improve the operating performance... Introduction Organizational performance comprises the actual output or results of an organization as measured against its intended outputs. Organizational performance based on internal objectives and external competition should be measured using the metrics of margins, growth, market share, and customer satisfaction. Whether for-profit or non -profit, organizations plan to succeed. As a result Management uses a process of organizing, planning, leading and controlling resources within an entity with the overall aim of achieving its objectives. These process leads to make decisions and resolve issues in order to be both effective and beneficial. One of these processes involves financial management. Financial management refers to how a company manages its capital (money) in order to fulfill the goals of the company Sound financial management as found in boundless (n.d.), creates value and organizational ability through the allocation of scarce resources amongst competing business opportunities. It is an aid to the implementation and monitoring of business strategies and helps achieve business objectives. Financial managers are responsible for this function and are held responsible by shareholders and other investors as they manage the company's capital. Financial management involves estimation of capital requirements and the determination of capital structure among other duties. These duties can directly affect organizational performance. Performance measurement provides useful insights for conducting annual reviews of managers and employees and is also important for understanding how a company is performing compared with its competitors According to Richard et al. (2009)\"Organizational performance encompasses three specific areas of firm outcomes: (a) financial performance (profits, return on assets, return on investment, etc.); (b) product market performances (sales, market share, etc.); and (c) shareholder return (total shareholder return, economic value added, etc.)\"(p.1). Organizations performance are influenced by a broad variety of factors , including administrative, supply chain management, capital structure decision, investment appraisal techniques, dividend policy, working capital management, capital budgeting and financial performance assessment and more. A good combination of all these principles and practices determines organizational success. An effective financial strategy directly impacts organizational performance. Performance goals can be short-term objectives set for specific targets or over long-term. These goals are usually related to the overall goals of the organization. An effective financial management system improves short- and long-term business performance by streamlining invoicing and bill collection, eliminating accounting errors, minimizing record-keeping redundancy, ensuring compliance with tax and accounting regulations, and offering flexibility and expandability to accommodate change and growth. A financial manager has to decide on the type of projects that the organization can undertake considering the most efficient and effective management of their limited resources in a manner as to accomplish the objectives of the organization. The decisions financial managers make in order to achieve organizational goals, has to be carefully planned because of the eventual consequence. This paper considers how working capital directly affects organizational performance. Working Capital and organizational performance Working capital is the amount of cash and liquid assets an organization owns. In the normal course of operations, a business must have cash to pay expenses and liabilities that are due. This may include payroll, monthly rent and utility expenses, and other operating costs. Working capital is the money that is available to cover these expenses and is readily accessible. As defined by boundless Working capital is a financial metric which represents operating liquidity available to a business, organization or other entity, including a governmental entity. Along with fixed assets, such as plant and equipment, working capital is considered a part of operating capital. Net working capital is calculated as current assets minus current liabilities. If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit. According to Haron and Nomran (2016), \"Empirical evidences show that working capital management directly impacts the performance of a firm thus, managers should be sensitive on the factors affecting working capital management to ensure a sufficient level of working capital for the firm to stay resilient and competitive\" An increase in working capital indicates that the business has either increased current assets (that it has increased its receivables, or other current assets) or has decreased current liabilities - for example has paid off some short-term creditors. The management of working capital involves managing inventories, accounts receivable and payable, and cash. In a study aimed at examining how working capital management affects the profitability of corporations, Thapa, P. P., focused his study on analyzing how working capital management affects the profitability for a sample of 30 Food and Beverage corporations from USA and Canada that It was observed that the working capital measure, the cash conversion cycle was positively related to the profitability and cash flow (2013). Profitability can be evaluated by looking at return on capital (ROC). This metric is determined by dividing relevant income for the 12 months by the cost of capital used. When ROC exceeds the cost of capital, firm value is enhanced and profits are expected in the short term. Working capital efficiency is determined by calculating the working capital ratio. This ratio is a key indicator in the company's financial health. The working capital efficiency is calculated by taking current assets divided by current liabilities. If the result of the calculation is less than 1.0, then it is taken as a sign that the company is having financial issues. If the result of the calculation is greater than 1.0 but less than 2.0, then the company is in good financial health (Thapa, P. P., 2013). According to a financial presentation on fiscal year 2017 for Wal-Mart store Inc. ROA was 7.2 percent and 7.5 percent for the trailing twelve months ended January 31, 2017 and 2016, respectively. ROI was 15.2 percent and 15.5 percent for the trailing twelve months ended January 31, 2017 and 2016, respectively. Free cash flow was $20.9 billion and $15.9 billion for the twelve months ended January 31, 2017 and 2016, respectively. The increase in free cash flow was led by improved working capital management. Management believes, however, that free cash flow, which measures our ability to generate additional cash from their business operations, is an important financial measure for use in evaluating the company's financial performance. On the other hand the outcome by J. Aloy Niresh in his study, which involved 30 manufacturing firms listed on the Colombo Stock Exchange (CSE) from 2008 to 201, yielded a different outcome. The study reveals that, there is a negative relationship between cash conversion cycle and performance measures. Performance was measured in terms of return on assets and return on equity while cash conversion cycle, current assets to total assets and current liabilities to total assets were used as measures of working capital management. (2012) Finally, Baos-Caballero et al. (2014, Mar.) in their research, stated that \"there is an inverted Ushaped relation between working capital and corporate performance, which implies that there exists an optimal level of investment in working capital that balances costs and benefits and maximizes a firm's performance. That is, investment in working capital and corporate performance relate positively at low levels of working capital and negatively at higher levels\" ( p. 332 -338). Conclusion It is evident that there exist a relation between working capital and organizational performance. The goal of working capital management is to ensure that the firm is able to continue its operations and that it has sufficient cash flow to satisfy both maturing short-term debt and upcoming operational expenses. Organizational performance can be evaluated by looking at return on capital and other financial and management practices. Working capital is a prevalent metric for the efficiency, liquidity and overall health of a company. When a company does not have enough working capital to cover its obligations, financial insolvency can result and lead to legal troubles, liquidation of assets and potential bankruptcy. Thus, it is vital to all businesses to have adequate management of working capital. Efficient management of working capital plays an important role of overall organizational performance. That said working capital is not the only measure to financial performance or organizational performance. Reference Pierre J. Richard, Timothy M. Devinney, George S. Yip and Gerry Johnson (2009): Measuring Organizational Performance: Towards Methodological Best Practice. Journal of Management. doi: 10.1177/0149206308330560. https://www.researchgate.net/deref/http%3A%2F %2Fjom.sagepub.com%2Fcgi%2Fcontent%2Frefs%2F35%2F3%2F718 Source: Boundless. "Measuring Organizational Performance." Boundless Management Boundless, 26 May. 2016. Retrieved 30 Mar. 2017 from https://www.boundless.com/management/textbooks/boundless-management-textbook/control8/control-process-61/measuring-organizational-performance-310-1888/ Haron, R., & Nomran, N. M. (2016). DETERMINANTS OF WORKING CAPITAL MANAGEMENT BEFORE, DURING, AND AFTER THE GLOBAL FINANCIAL CRISIS OF 2008: EVIDENCE FROM MALAYSIA. Journal Of Developing Areas, 50(5), 461-468. THAPA, P. P. (2013). HOW DOES PROFITABILITY GET AFFECTED BY WORKING CAPITAL MANAGEMENT IN FOOD AND BEVERAGES INDUSTRY?. Journal Of Advanced Research In Management (De Gruyter Open), 4(2), 79. doi:10.14505/jarm.v4.2(8).01 Wal-mart Store,Finanacial presentation Q4 FY17. (n.d.) Retrived from Inc. file:///C:/Users/Kenny/Downloads/q4-fy17-earnings-presentation-final.pdf J. Aloy Niresh (2012) Working Capital Management & Financial Performance of Manufacturing Sector in Sri Lanka. Retrieved from: http://citeseerx.ist.psu.edu/viewdoc/download? doi=10.1.1.734.7796&rep=rep1&type=pdf Sonia Baos-Caballero1, , Pedro J. Garca-Teruel, , Pedro Martnez-Solano(2014, Mar.) Working capital management, corporate performance, and financial constraints http://dx.doi.org.ezproxy.umuc.edu/10.1016/j.jbusres.2013.01.016 Boundless Source: Boundless. "The Importance of Finance." Boundless Business Boundless, 26 May. 2016. Retrieved 31 Mar. 2017 from https://www.boundless.com/business/textbooks/boundlessbusiness-textbook/financial-management-19/introduction-to-financial-management-114/theimportance-of-finance-533-7822/ Source: Boundless. "Working Capital Management Analysis." Boundless Accounting Boundless, 26 May. 2016. Retrieved 31 Mar. 2017 from https://www.boundless.com/accounting/textbooks/boundlessaccounting-textbook/reporting-of-current-and-contingent-liabilities-9/reporting-and-analyzing-currentliabilities-64/working-capital-management-analysis-304-3753/