RENITA IS A LECTURER IN ONE OF THE TOP MOST UNIVERSITIES IN INDIA.SHE IS A POST GRADUATE IN BUSINESS ADMINISTRATION,SHE TEACHES ECONOMIC ANALYSIS,ORGANISATIONAL BEHAVIOUR AND HUMAN RESOURCE MANAGEMENT.
The working capital in a firm generally arises out of four basic factors like sales volume,technological changes,seasonal , cyclical changes and policies of the firm.The strenghth of the firm is dependent on the working capital as discussed earlier but this working capital is inteslf dependent on the level of sales volume of the firm.The firm requires current assets to support and maintain operational or functional activities.By current assets we mean the assets which can be converted readily into cash say within a year such as receivables,inventories and liquid cash.If the level of sales is stable and towards growth the level of cash,receivables and stock will also be on the high.
However,with the increase in the working capital as a result of high sales volume this pattern is referred to as working capital management because in order to produce or manufacture additionally or increase the overall sales target,more amount of working capital is required by the firm which is possible only when the mannagement of working capital is prudent and effective whereas in case of declining sales reduction in the allocation of working capital will be prudent way to manage every business operation.Technological changes too has an impact on the management of working capital because as the production process changes or the line of business changes ,all this an an effect on the working capital requirements which in turn gets affected.Apart from this the policies of the firm too affects the pattern of working capital management.Seasonal and cyclical fluctuations,recession too adversely affects the sales pattern or functionalibilty of the firm.
Working capital management requires examination of maturity composition or liquidity of firms assets as it involves funadamental decisions on the firms liquidity and maturity composition of its debts therefore a trade off between profitabilty and risk inflences these decisions.In a nut shell the management of working capital proceeds with the aim of achieving three goals :
- Adequate liquidity
- Minimization of risks
- Contributing to maximising firm's value
- Related Videos
- Related Articles
- Ask / Related Q&A
- Search-n-organize: State-of-the-art Low-budget Document Management Solutions
- It Management in the Clouds With Saas
- How to Avoid Hiring a Bad Property Management Company in the Oc
- How To Avoid Hiring A Bad Property Management Company In The Oc
- Enterprise it Asset Management - Managing Your Company's it Assets
- Manager Arena - Online Soccer Manager
- Taking it Inventory –network Inventory Management
- Best Related Inventory Management Software
MLM lead system
By: Ryan | 24/12/2009An MLM lead system is most important factor in MLM marketing.
Versatility of CMMS Products
By: Ashley Combs | 23/12/2009Versatility of CMMS products is a highly coveted and appreciated feature for any business. Enterprise Asset Management allows you to get the most out of your plant assets in order to cut overhead and keep business costs low. No matter what CMMS products that a business implements, the tools for cost evaluation and equipment maintenance will benefit any business.
What Makes Revamped Office Furniture Can Become Just The Ticket For All Offices
By: Aleks G | 23/12/2009In our modern society, there is never-ending conversations in the area the preservation of precious resources.
WordPress can make easy to use Content Management System
By: spinxwebdesign | 23/12/2009WordPress is very versatile software program which can be used for many purposes. One of the biggest advantages of WordPress is, it is almost free and using it one can easily make a decent website. This article will present an overview on how WordPress can be used as CMS.
Ideal Bookkeepers and Bookkeeping
By: vish ks | 23/12/2009The chief aim of any individual who sets up a business is to earn substantial income. In order to conduct business in the appropriate way, one needs to have at least some acquaintance with the different operations associated with it. Well, regarding bookkeeping activities, considering the current economic scenario, it would be prudent to hire the services of some professional bookkeeping firm.
Bookkeepers Adopt a Meticulous Approach
By: vish ks | 23/12/2009All Companies must conduct an accurate analysis of the bookkeeping affairs for the faster growth of the Company. Bookkeeping as such is an assortment of multiple activities. Usually organizations and Companies employ a few accountants and bookkeepers for handling their accounts. But, the very concept of maintaining a huge workforce in the bookkeeping department is not recommended nowadays.
Operations Risk and Business Continuity – The Eurostar Case
By: Stanley Epstein | 22/12/2009The recent Eurostar train failures in the English Channel Tunnel are an excellent example of Operational Risk. This event clearly indicates the unpredictable nature of this type of risk as well as the procedures that should have been in place to have avoided the extreme disruptions to the plans of thousands of holiday makers.
Build Your Salespeople’s Strengths And Use Them As Launch Pads For Better Sales Success
By: Ralph Burns | 22/12/2009I used to work for a company that tried to change me into someone I just was not. In an interview, the HR manager said, “This company will help you overcome your weaknesses by thrusting you into different kinds of situations. We will help you grow to become a completely different person.” Here is the thing. There’s nothing wrong with “overcoming your weaknesses“. But to turn me into a “completely different person,” that’s something else.
Managerial Considerations in Dividend Pay-Out
By: RENITA DUBEY | 02/07/2009 | Strategic PlanningA host of factors have to be considered by the management before deciding upon the final dividend pay-out.Nevertheless,these considerations must have a lot of relevance to the theory of dividend pay-out and the valuation of the firm.Here are the needs for security analysis and security reports.The management is to consider what information the company is conveying with its present dividend and what it would convey with a possible change in dividend.
Financial Analysis-the Accountants Tool
By: RENITA DUBEY | 25/06/2008 | ManagementIn today’s complex financial world, a continuous study of financial management is imperative and ensures sound Financial Management, the need for financial analysis cannot be over-emphasised.There are different methods of financial analysis that are usually adopted enable the financial manager to assess the financial position
Amity Institute of Competitive Intelligence
By: RENITA DUBEY | 18/06/2008 | College & UniversityAmity institute of Competitive Intelligence and corporate warfare,An institution of excellence offers a full time M.B.A program with a dual specialization in Sales&Marketing;.This course is becoming very popular among students.The Institution aims at imparting best of knowledge and facilitates research in Competitive Intelligence &Corporate;Warfare blended with management,business Strategy and environmental sensitivity thereby enabling students to develop competitive mechanisms for organisations.
Working Capital Management-an Effective Tool for Organisational Success
By: RENITA DUBEY | 18/06/2008 | ManagementWorking capital by the term itself is referred to as the capital employed in the day to day working of the business operations.Therefore proper adminstration of current assets and current liabilities is known as working capital.It is very essential to maintain a running cash reserve to keep the organisation in a working state thereby maintaining its positive hold on the liquidity.All managerial or otherwise financial decisions are based on the strength of the firm working capital.
Role of the Financial Manager
By: RENITA DUBEY | 16/06/2008 | ManagementWith the rapidly changing business environment and highly competitive environment ,the ever changing market situations call for the ability of Financial manager who can react quickly,coordinate and adjust according to the changing business scenario.However to ensure better management of all the functions of organisation,the role of the finance manager is imperitive and cannot be overemphasised.Hence effective Financial management is important and this can be done only by a Finance manager.