DIITCTG BBA,Working Capital Management
Working capital management has gained the attention of industry and academia as an exclusive area of study after liberalization of Indian Economy. Management of working capital sometimes becomes more important than the management of long term funds because the day-to-day operations of any business largely depend upon this source of finance. Many firms have been seen in the past closing down for the want of short term finance. The profitability of any business to a larger extent is affected by this source of finance due to efficient management of current assets and current liabilities. Hence, learning about managing working capital has become more important and critical in the modern scenario.
After completing this chapter, you will be able to do the following:
Describe primary sources of liquidity and factors that influence a company’s liquidity position.
Compare a company’s liquidity measures with those of peer companies.
Evaluate working capital effectiveness of a company based on its operating and cash conversion cycles, and compare the company’s effectiveness with that of peer companies.
Explain the effect of different types of cash flows on a company’s net daily cash position.
Identify and evaluate the necessary tools to use in managing a company’s net daily cash position.
Calculate and interpret comparable yields on various securities, compare portfolio returns against a standard benchmark, and evaluate a company’s short-term investment policy guidelines.
Evaluate a company’s management of accounts receivable, inventory, and accounts payable over time and compared to peer companies.
Evaluate the choices of short-term funding available to a company and recommend a financing method.