The Effect of Inventory Management on Working Capital Efficiency in Retail Chains

Sound inventory management is also a key in maximizing working capital efficiency, particularly in the retail industry, whichis highly competitive. Retail chains tend to have difficulty in ensuring proper inventory levels to satisfy customers whileavoiding too much excess inventory that locks up working capital. This study explores the link between inventory managementpractice and working capital efficiency in chain retailing. The research utilizes quantitative and qualitative methods, examiningimportant ratios like inventory turnover ratio and days inventory outstanding and their impact on liquidity, profitability, andcash flow management. Data is collected using case studies of chosen retail chains and financial statement analysis for fiveyears. The study names best practices in inventory control such as employing Just-in-Time (JIT) systems, forecasting, andinventory optimization technology that lead to enhanced working capital cycles. The study establishes that strategic inventorymanagement plays a critical role in boosting working capital efficiency, which leads to better financial performance andcompetitive advantage for the retail sector.