An Assignment on “Working Capital Management
&
Short Term Sources of Working Capital”
WORKING CAPITAL MANAGEMENT
Assignment objectives
? Underline the need for investing in current assets, and elaborate the concept of operating cycle.
? Highlight the necessity of managing current assets and current liabilities.
? Explain the principles of current assets investment and financing.
? Focus on the proper mix of short-term and long-term financing for current assets.
WORKING CAPITAL MANAGEMENT
What Is Working Capital?
Working capital refers to the cash a business requires for day-to-day operations, or, more specifically, for financing the conversion of raw materials into finished goods, which the company sells for payment. Among the most important items of working capital are levels of inventory, accounts receivable, and accounts payable. Analysts look at these items for signs of a company's efficiency and financial strength.
The Working Capital Position:
For investors, the strength of a company's balance sheet can be evaluated by examining three broad categories of investment quality: working capital adequacy, asset performance and capitalization structure. In simple terms, this entails measuring the liquidity and managerial efficiency related to a company's current position. The analytical tool employed to accomplish this task will be a company's cash conversion cycle.
Evaluating Companies
Investors should favor companies t ...