Working Capital Management

Apuntes

WORKING CAPITAL MANAGEMENT FM 101 Ms. VENUS CHARISSE L. MABILING Lecturer- FM 101 1. Understand the factors determining a firm's working capital needs. 2. Learn how to manage cash and debt efficiently. 3. Solve problems relating to the time value of money. 4. Discuss the basics of financial markets and the stock exchange INTENDED LEARNING OUTCOMES WHAT IS WORKING CAPITAL? CURRENT ASSETS CURRENT LIABILITIES WHAT IS WORKING CAPITAL? It represents operating liquidity available to a business, organization, or other entity, including governmental entity. It involves in managing inventory, accounts receivable and payable and cash. WORKING CAPITAL MANAGEMENT It involves decisions relating to working capital and short term financing. The goal of working capital management is to ensure that the firm is able to continue its operations and that it has sufficient cash flow to satisfy both maturing short term debt and upcoming operational expenses. APPROACHES TO FINANCE CURRENT ASSETS 1. Matching Approach The firm adopts a financial plan involves the matching of the expected life of assets with the expected life of the sources of funds raised to finance assets. The firm uses long term funds to ...