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BSc Accounting and Finance: Financial Management
Finance & Accounting
Pages 10 (2510 words)
Task 1 Critically discuss why working capital management is considered important and the various approaches to the management of inventory, receivables, cash and payables 1. Introduction The development of critical business decisions is a complex and demanding activity…
The concept of the working capital is used in order to evaluate the potentials of a firm to respond to its current needs – the long terms needs could be also included when the concept of the permanent working capital is used. Current paper reviews the value of working capital management for modern organization; reference is made to the common characteristics of working capital and its common use for developing critical business decisions. At the same time, the practices available for the management of working capital are presented and evaluated. Emphasis is given on the following forms of working capital: inventory, receivables, cash and payables. It is proved that working capital is of significant value not just for developing important business plans but also for estimating the potentials of the organization to meet its objectives – either in the short or even the long term. It is also proved that the working capital can perform differently within organizations of different characteristics; it is assumed that working capital is volatile to the conditions of the internal or the external environment. The failure of choosing appropriate working capital management technique would be another reason for the above outcome. 2. ...
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