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African Journal of Finance and Management

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Determining the Optimum Level of Working Capital in the Cameroon Business Environment

William Muffee Visemith

Abstract


The issue of working capital is very important to the operations of the Cameroon Development Corporation (CDC) Net working capital (i.e. the excess of liquid current assets over current liabilities) is an indispensable component of any business organization's capital structure. For any company to make profit in order to enhance growth depends on the size of working capital and its proper management. The mismatch of working capital and fixed capital will always bring problems to the financial operations of the company. There must be an optimum size of working capital is a dangerous to an organization's working life as too little working capital


This article sets out the modalities for determining the optimum size of working capital. This coupled with sound working capital always forces management to go into an overtrading situation (negative working capital) Looking the case of CDC there is an overtrading situation. This case is used to examine the causes and consequences of overtrading The paper concludes that organizations must properly manage their working capital in order to achieve growth. To achieve the main objective of this study (i.e. determining the optimum size of working in order to achieve the main objectives of this study (i.e. determining the optimum size of working capital) data was collected and analysed from CDC This is because CDC is a very large corporation and working capital problems are likely. The study found that CDC is a very large corporation and working capital problems are very likely The study found that CDC has acute working capital problems resulting in losses These problems stem from poor working capital management approaches employed over the years. Every organization must seek a point of balance in its working capital in order to avoid a loss-making situation.

African Journal of Finance and Management Vol.10(1) 2001: 69-83



http://dx.doi.org/10.4314/ajfm.v10i1.24310
AJOL African Journals Online