For businesses, an efficient working capital management is a vital component of success and survival; in terms of both profitability and liquidity. The crucial part in managing working capital is required maintaining its liquidity in day-to-day operation to ensure its smooth running and meet its obligation. Liquidity is a precondition to ensure that a firm is able to meet its short-term obligations and its continued flow can be guaranteed from a profitable venture (Gitman, 2005). The successful management of WC enables a firm to react quickly and appropriately to unanticipated changes in market variables, such as interest rates and raw material prices and gain competitive advantages over its rivals. Among the most important items of working capital are levels of inventory, accounts receivable and accounts payable (Padachi, 2006).
