Post restructuring analysis of working capital management of Pokupharma Limited

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Date
August, 2015
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Abstract
Since its establishment in 1995, the operations Pokupharma Limited has been centred on the provision of quality and affordable medicines to keep the people of Ghana healthy and provide people in poor health with medicines to get them healthy. The company did this for the first thirteen years through simple buy-and-sell. However, since 2011 the company restructured and started manufacturing of pharmaceutical products. Nonetheless, there has not been any documented work on the working capital management since the restructuring. Moreover, the restructuring of the company has brought about changes in the components of working capital and this is an area of important concern to the management of the company. The purpose of the study is to fill this research gap in working capital management and the recommendations will also help management to enhance the fortunes of the company. Though the scope of the study extends beyond six years, the analysis of the financial statement was limited to a six-year period spanning from FY2008 to FY2013. The study revealed that the company‟s working capital cycle has continuously been negative since FY2010. The company‟s liquidity position was found to unsatisfactory because of the poor management of cash and other current assets. The large amount of investment in inventories with no immediate use has also affected the profitability of the company. On this note the study recommended that regular measurement of working capital, for quick identification of the trend and any looming liquidity problems that require immediate redress. All idle funds with no immediate use should be put into productive investments. Also, periodical physical review of the inventory needs to be conducted to ensure reduction in inventory carrying costs of slow-moving or obsolete items to improve cash flow.
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A Thesis submitted to the Department of Accounting and Finance, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirements for the degree of Master of Business Administration (Finance Option)
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