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  • Working Capital Management

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    Hrishikesh R Bhat
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    Working capital refers to a company's current assets and current liabilities. Current assets can be converted to cash within a year, such as debtors and prepaid expenses. Current liabilities are short-term debts like amounts owed to vendors and outstanding expenses. Factors that affect working capital include the nature of the business, availability of raw materials, growth prospects, business cycles, and inflation. Strategies for financing working capital include matching assets and liabilities, using conservative or aggressive policies, or balancing risks. Working capital can be calculated using percentage of sales, regression analysis, cash forecasting, operating cycle analysis, or projected balance sheet methods.

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    Working capital refers to a company's current assets and current liabilities. Current assets can be converted to cash within a year, such as debtors and prepaid expenses. Current liabilities are short-term debts like amounts owed to vendors and outstanding expenses. Factors that affect working capital include the nature of the business, availability of raw materials, growth prospects, business cycles, and inflation. Strategies for financing working capital include matching assets and liabilities, using conservative or aggressive policies, or balancing risks. Working capital can be calculated using percentage of sales, regression analysis, cash forecasting, operating cycle analysis, or projected balance sheet methods.

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    3 views6 pages

    Working Capital Management

    Uploaded by

    Hrishikesh R Bhat
    Working capital refers to a company's current assets and current liabilities. Current assets can be converted to cash within a year, such as debtors and prepaid expenses. Current liabilities are short-term debts like amounts owed to vendors and outstanding expenses. Factors that affect working capital include the nature of the business, availability of raw materials, growth prospects, business cycles, and inflation. Strategies for financing working capital include matching assets and liabilities, using conservative or aggressive policies, or balancing risks. Working capital can be calculated using percentage of sales, regression analysis, cash forecasting, operating cycle analysis, or projected balance sheet methods.

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    WORKING CAPITAL MANAGEMENT

    WHAT IS WORKING CAPITAL ?

    A company’s working capital essentially consists of current assets and current


    liabilities. Current assets refer to those assets that can be converted into cash within
    one year, like debtors, and stock and prepaid expenses- expenses that have already
    been paid for. Current liabilities are the day-to-day debts incurred by a business in its
    operation. These could be credit purchases made from vendors (creditors) and
    outstanding expenses (expenses that are yet to be paid).
    Factors affecting working capital

     Nature of Business  Availability of raw materials


     Scale of Operation  Growth prospects
     Business Cycle  Level of Competition
     Seasonal Factors  Inflation
     Production Cycle
     Credit Allowed
     Credit Availed
     Operating Effeciency
    Strategies of Financing Working Capital

     Matching Approach
     Conservative Approach
     Trade off Policy
     Aggressive Policy
    Methods of Calculating Working Capital

     Percentage of Sales Method


     Regression analysis method
     Cash forecasting method
     Operating Cycle method
     Projected balance sheet method
    THANKYOU

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