In a detailed response please tell me: What is working capital management?
How does working capital management address the day-to-day cash conversion cycle?
2007-10-07 18:08:34 · 2 answers · asked by Tommey H 1 in Business & Finance ➔ Other - Business & Finance
Working Capital Management
A managerial accounting strategy focusing on maintaining efficient levels of both components of working capital, current assets and current liabilities, in respect to each other. Working capital management ensures a company has sufficient cash flow in order to meet its short-term debt obligations and operating expenses.
Implementing an effective working capital management system is an excellent way for many companies to improve their earnings. The two main aspects of working capital management are ratio analysis and management of individual components of working capital.
A few key performance ratios of a working capital management system are the working capital ratio, inventory turnover and the collection ratio. Ratio analysis will lead management to identify areas of focus such as inventory management, cash management, accounts receivable and payable management.
The attached articles would be useful to you.
2007-10-07 21:48:40 · answer #1 · answered by Sandy 7 · 0⤊ 0⤋
I'm sure you could find the answer in your textbook if you tried. That's what it's for after all.
2007-10-08 03:46:16 · answer #2 · answered by ccppc 2 · 0⤊ 0⤋