Working Capital Management Assignment help

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Working capital refers to the financial liquidity available to a given corporation. It is considered a part of the operating capital of an organization along with long term assets like factories or office spaces. Working capital comprises the current assets of the given company which include cash, cash receivables, inventory, short term investments etc. Three important aspects of the working of an organization impact its working capital position. They are accounts receivable, inventory and accounts payable. The first two are part of current assets while the third is part of current liabilities.  All financial assets that can be converted into money within 12 months are current assets. Net working capital is calculated by subtracting current liabilities from current assets. Working capital management involves short term decision making i.e. managing the short term assets and liabilities of a firm, thus ensuring that the firm has enough financial resources to keep operations running and to meet upcoming demands. Working capital management decisions therefore are based either on cash flows or on profitability or both. The management of the working capital involves four major factors namely cash management, debtors management, inventory management and short term financing.  The primary considerations taken into account while managing working capital are cash conversion cycle, return on capital, economic value added, just-in-time, economic order quantity, discounts and allowances and factoring. Ratios such as return on equity and return on investment which affect the cash conversion cycle of an organization are taken into consideration during the working capital management process. After assessing these ratios and the general financial position of the firm the managers perform working capital management and attempt to manage the cash and cash equivalents, inventory and other short term sources of finance to effectively address short term debts and potential operational costs in the future. If you need working capital management assignment help then contact us at the finance assignment help site.

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