Working Capital Policy

Working Capital - The Management of The Working Capital Working Stony Brook College of Business BUS 330 V Giardini 1 WORKING CAPITAL Assets and

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
1 The Management of The Management of Working Capital Working Capital Stony Brook College of Business BUS 330 V. Giardini
Background image of page 1

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

View Full DocumentRight Arrow Icon
2 WORKING CAPITAL Assets and liabilities required to operate a business on a day to day basis Cash Payables Receivables Accruals Inventory Short Term - Turn Over Continually TRADITIONAL DEFINITIONS TRADITIONAL DEFINITIONS Gross Working Capital = Current Assets Net Working Capital = Current Assets - Current Liabilities WORKING CAPITAL REQUIRES FUNDING WORKING CAPITAL REQUIRES FUNDING Net working capital reflects the funding required to support routine operations THE OBJECTIVE OF WORKING CAPITAL MANAGEMENT THE OBJECTIVE OF WORKING CAPITAL MANAGEMENT Run the company effectively with as little money tied up in the current accounts as possible. Implies trade-offs because it's easier to run a business with more working capital than with less
Background image of page 2
3
Background image of page 3

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

View Full DocumentRight Arrow Icon
4 PERMANENT AND TEMPORARY WORKING CAPITAL PERMANENT AND TEMPORARY WORKING CAPITAL Temporary Working Capital supports seasonal operations and need not be maintained all year $ $ Temporary Working Capital Permanent Permanent Working Capital Working Capital Fixed Assets Fixed Assets Time Time Stable Company Seasonal Company Working Capital Needs of Different Firms
Background image of page 4
5 $ Temporary Working Capital Short-Term Debt Financing Long-Term Debt Permanent and Equity Working Capital Financing Fixed Assets Time (a) Conservative Policy Using Largely Long Term Sources Working Capital Financing Policies FINANCING WORKING CAPITAL FINANCING WORKING CAPITAL
Background image of page 5

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

View Full DocumentRight Arrow Icon
$ Temporary Working Capital Short-Term Debt Financing Permanent Working Capital Long-Term Debt and Equity Fixed Assets Financing Time FINANCING WORKING CAPITAL
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/15/2012 for the course GERM 200 taught by Professor Kuhmar during the Spring '10 term at SUNY Albany.

Page1 / 17

Working Capital - The Management of The Working Capital Working Stony Brook College of Business BUS 330 V Giardini 1 WORKING CAPITAL Assets and

This preview shows document pages 1 - 7. Sign up to view the full document.

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