1. Rationale of the study(paragraph

1. Rationale of the study
(paragraph) Viet Nam is facing many challenges in the integration to the world economies. The competition and profit have become the motivation for companies to renovate their technology and equipment, invest in new industries and dominate the market. This situation results in increasing the demand for capital of companies in the economy. That is also the reason why companies need to have a certain amount of capital including fixed capital, working capital and other specific capital. All these types of capital will help the companies remain their business activities and take forward.
Companies have continuously improved their management in all aspects of business operations to have a sustainable position and develop in the international economic environment. It is obvious that a company which has an effective method of working capital management will achieve high profits and good performances. Moreover, it is really necessary to manage the working capital because of some basic reasons below:
Working capital is seen as the lifeblood for feeding up daily operations of a company. The first and also the most critical usage of working capital is to provide an ongoing investment in current assets for serving daily expenditures such as payroll, vendor invoices, and inventory purchases. The business also needs working capital for prepaid business costs such as license, insurance policies or security deposits.
Second, working capital helps address seasonal or cyclical financing needs. Since most businesses do not receive prepayment for selling their goods or services, they need to finance their purchase of raw materials, production and sales of goods prior to receive payment from their customers.
Third, working capital is needed to sustain firm’s growth. The firm is expanded by investing in new plants or machinery. Working capital is also required to facilitate sales growth. It is because the business grows, it requires larger investments in inventories, accounts receivable, personnel and other items to increase their sales.
Finally, working capital is used to take undertake activities to improve business operations and to remain competitive, such as activities for product development or exploring new markets.
For the reasons above, I would like to choose the topic: “Working capital management and suggestions for improvement in GG Viet Nam Co., Ltd” as the title of my thesis