Working_capital_management[1].rtf - Working capital...

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Working capital management ParT I Working capital management nature and scope Introduction & definition Component of working capital significance of working capital management Operating cycle Types of working capital Net vs gross working capital Causes of changes in working capital Dangers of excess working capital Dangers of inadequate working capital
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Determinants of working capital Assessment of working capital requirement illustration Introduction & Definition
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Working capital management is associated with short-term financial decision making. short-term financial decisions typically involve cash inflows and outflows the occur within a year or less. for instance, short-term financial decisions are involved when a firm orders a raw materials or merchandise, pay in cash and anticipates selling finished good in one year for cash. In contrast, long-term financial decisions are involved when a firm purchases a special equipment that will reduce operating costs over, say, the next five years. Introduction & definition Components of working capital
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Significance of working capital Management Working capital comprises a large portion of the firm’s total assets. Although the level of working capital varies widely among different industries, firms in manufacturing and trading industries more often than not, keep more than Half of their assets in current assets. The financial manager has considerable responsibility and control in managing the level of current assets and current liabilities.
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