In the world of business,
survivability of an organization is more doubtful especially if the business
organization is unable to meet the short-term obligation even if they are still
able to gain a big sum of profit. Structure, budgeting and managing decisions of
working capital are some of the factors that a corporate finance deals in the
business. The blood line of a business organization deals with the working
capital, with a proper management of the working capital it could affect the organizational
performance of a business knowing that it is a significant affair to the
management of the business. With the help of proper management of working
capital it could maintain the factors that could affect the business operation
like profitability, liquidity, survivability and solvency of the business. With
the connection between working capital and organizational performance of a
business, there is an increasing interest in the investigation of the two variable.
Small Medium Enterprises gained a widespread recognition as it could give job opportunities
to the people within the economy and promoting its culture, with SMEs they can
make a healthy and vital economy.  According
to Storey (1994) majority of the enterprises in the world are SMEs, however the
failure to manage the business of SMEs are also substantial the reason for this
failure is the lack of ability to control their business performance (Snober
Javid, 2014).

Part of the firms total
wealth is the Working Capital, wherein the high ranking management has an
underlying control of it because for them lack of results and observation of
the idea that organizational performance is due to the working capital.  (Ricci and Divito, 1998; Garcia- Teruel and
Martinez Sonano, 2007; Hill et al., 2010). On the other hand, according to
Adeel Mumtaz er. al (2010) with the use of working capital efficiently and by
managing it effectively there is a high possibility that organizational
performance would increase and could decrease the change of bankruptcy of the
business, according to them in order for the firm performance to increase the
business should minimize their debt. 

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