SWM111

Sports and Wellness Program Finance and Accounting

Name: Joanelivert Mercado

Research and Discuss the following:

1. The role of cash in business (sources of cash).

Cash is the most liquid asset and can be used immediately to perform economic actions like
buying, selling, or paying debt, and meeting immediate wants and needs. Bank can attract
significant liquid funds to generate stronger profits, more stability, and more confidence among
depositors, investors, and regulators.
Cash inflow is the lifeblood of your business and comes from sources like payments from
customers, receipt of a loan, monetary infusion from an investor, or interest on savings or
investments. Cash is also important because it later becomes the payment for things that make
your business run: expenses like stock or raw materials, employees, rent and other operating
expenses. Naturally, positive cash flow is preferred. Positive cash flow means your business is
running smoothly. High positive cash flow is even better and will allow you to make new
investments (hire employees, open another location) and further grow your business.

2. Mismanagement of working capital.

Working capital management is the management of all aspects of both current assets and
current liabilities, to minimize the risk of insolvency while maximizing the return on assets.
Current assets are a major financial position statement item and especially significant to smaller
firms. Mismanagement of working capital is therefore a common cause of business failure, like
for example, inability to meet bills as they fall due, demands on cash during periods of growth
being too great (overtrading), and overstocking. Working capital management is a key factor in
an organization's long-term success.