Title: An Analysis of Working Capital Management and Its Influence on the Perceived Liquidity Position of Small Merchandising Enterprises
Authors: Anton Ranier C. Macapagal, Lorraine O. Huertas , Anthony M. Gomez, Cynthia C. Naraval Arabela A. Reyes, Alan Y. Cabaluna, Ph.D., Jason Y. Carreon, CPA, MBA
Volume: 10
Issue: 7
Pages: 49-59
Publication Date: 2026/07/28
Abstract:
The study examined the correlation between working capital management (WCM) and perceived liquidity position among small merchandising businesses in Guagua, Pampanga. Brought by the inherent financial limitations and intensive operational demands, WCM is a core management function for effective control of their short-term financial position. The study utilized a 4-point Likert Scale survey questionnaire subdivided into five sections: cash management, accounts receivables (AR) management, inventory management, accounts payable (AP) management and perceived liquidity position. Data from 97 respondents demonstrated general application of WCM, suggesting the existence of functional financial systems, yet with critical implementation gaps. While stronger emphasis on planning and routine activities were recorded, respondents showed limited practice on monitoring, reconciliation, staff training, and contingency-related practices. Accordingly, while owners and managers perceive sufficient liquidity for daily operations, it was discovered to be not self-sustaining, as dependence on additional owner contributions remains to be a critical factor for their finances. Correlational analysis revealed a strong, positive and statistically significant relationship between WCM and perceived liquidity position of the said firms, with AR management yielding the strongest influence. These findings suggest the need to adopt stronger WCM policies to enhance liquidity and facilitate sound financial decision-making.