Working capital management has long occupied a central position in corporate finance theory and practice, yet its conceptual boundaries and practical implications continue to expand as firms operate in increasingly complex, resource-constrained, and risk-sensitive environments. Traditionally examined through the lens of liquidity, profitability, and short-term financial stability, working capital management is now recognized as a strategic function that influences firm value, investment capacity, access to finance, and organizational resilience. This article develops an integrated and theoretically grounded analysis of working capital management by synthesizing evidence from corporate finance literature, small and medium-sized enterprise studies, banking and credit research, and emerging insights from organizational systems and management standards. Drawing strictly on the provided body of literature, the study offers an extensive conceptual elaboration of how working capital policies shape firm performance across different institutional contexts, business cycles, and stages of organizational development.

The article advances the argument that working capital management is not merely a technical accounting function but a multidimensional governance mechanism that connects operational efficiency, financial discipline, leadership quality, and risk management. Empirical findings from diverse economies such as Belgium, Brazil, Sri Lanka, Vietnam, Nigeria, China, Finland, and Poland demonstrate that the relationship between working capital components and profitability is contingent upon firm size, financial constraints, credit availability, and macroeconomic conditions. Furthermore, recent

research on bank credit, investment constraints, and bankruptcy risk underscores the role of working capital decisions in determining firm survival and long-term value creation.

In addition, the article conceptually extends the discussion by integrating insights from management system implementation studies, particularly those examining structured standards and leadership-driven organizational practices. Although originating outside traditional finance research, these studies provide valuable theoretical parallels for understanding how disciplined processes, leadership commitment, and continuous improvement frameworks can enhance the effectiveness of working capital policies. By positioning working capital management as part of a broader organizational system, this study contributes to a more holistic understanding of financial decision-making.

Methodologically, the article adopts a qualitative, theory-driven synthesis approach, critically interpreting prior empirical findings without introducing new numerical models or datasets. The results section presents a descriptive consolidation of established empirical patterns, while the discussion section explores theoretical implications, counterarguments, limitations of existing studies, and avenues for future research. The article concludes that effective working capital management represents a strategic capability that strengthens firm value, mitigates bankruptcy risk, and supports sustainable performance, particularly for small and medium-sized enterprises operating under financial constraints.

Working capital management, firm value, liquidity policy, SME performance

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