Quantitative Techniques of Working Capital Management

Presented By: Deepika Sachdeva Nishtha Gandhi Vibhor Khandelwal

Working Capital
The money needed to fund the day to day operations of your business. It ensures that you have enough funds to pay your debts and meet expenses as they fall due, particularly the start- up period. Right Level of working capital: It depends on the industry & particular circumstances. If your working capital is too: High: your business has surplus which are not earning a return Low: indicate that your business is facing financial difficulties

Working Capital Cycle

Cash

Debtors

Creditors

Inventory

Working Capital Management

Managerial Accounting strategy that focus on maintaining It ensures that a company has sufficient cash flows to meet

efficient levels of both components of working capital.

its short term liabilities.

It is an excellent way for many companies to improve their

2 Aspects of W.C.M

earnings.

Ratio Analysis

Management of Individual Components of WC

Why managing Working Capital???

Short Term Liquidity Trade Off Between Profitability & Risk

Determining The Financing Mix

Inventory Management

Accounts Receivable Management

Cash Management
Management Of Working Capital

Short Term Financing

Monte Carlo Method

Computational algorithms that rely sampling to explain numerical results.

on

random

Used to value & analyze instruments, portfolios & investments by simulating the various sources of uncertainty affecting their value & then determining their average value.

Provides flexibility and can handle multiple sources of uncertainties.