DQ3A - H ow do you define working capital? What may happen...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
How do you define working capital? What may happen if an organization neglected to manage its working capital? What techniques do you recommend for your organization? Why Working capital measures the operating liquidity available to a business and it is calculated as Current Asset minus Current Liability Working Capital = Current Assets – Current Liabilities Net Working capital can be positive or negative. Negative working capital means company has more current liabilities than current asset and lack funds necessary. Working Capital Management is an important aspect of financial management of a business entity. Proper working capital management would lead to increased market share by giving proper supply of goods at better price. A company which can manage its working capital properly would be able to reduce its interest cost and in turn lead to reduced price for its product. In a competitive world where price is differentiator for many homogeneous product, the importance of working capital management is paramount. On the other hand ,
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/11/2011 for the course FIN 370 taught by Professor Unknown during the Spring '08 term at University of Phoenix.

Page1 / 2

DQ3A - H ow do you define working capital? What may happen...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online