Optimizing working capital boosts firm value, benefiting shareholders and stakeholders alike.
Efficient working capital management can boost a company's value. A study in India from 2004 to 2015 showed that shorter cash conversion cycles lead to higher firm value. There is an optimal level of investment in working capital that enhances shareholder value. The results suggest that managing working capital effectively can benefit not only the company but also investors, lenders, suppliers, and regulators.