Working Capital Policy

Chapter 1: Abstract

Working capital management is considered to be crucial elements in determining the financial performance of an organization. The primary purpose of this paper is to investigate the relationship between working capital management and financial performance. Performance was measured in terms of return on assets and return on equity while cash conversion cycle, current assets to total assets and current liabilities to total assets were used as measured of working capital management. The corporate value maximization strategy is executed with a focus on risk and uncertainty. This article presents the discussion about relations between firm’s networking investment policy and firm’s value.

Key word:

Working Capital, Concept of Working Capital, Classification of Working Capital, cash conversion cycle, Working capital investment and financing policies, Advantages and Disadvantages of Working Capital.

Introduction

Working capital policy is a short-term financial management, which involves management of the current assets and the current liabilities of a firm. A firm's value cannot be maximized in the long run

Unless it survives the short run. In fact the principal reason firm fail is because they are unable to meet their working capital needs.

Working capital is a common measure of a company's liquidity, efficiency, and overall health. Because it includes cash, inventory, accounts receivable, accounts payable, the portion of debt due within one year, and other short-term accounts, a company's working capital reflects the results of a host of company activities, including inventory management, debt management, revenue collection, and payments to suppliers.

Matrix

Methodology of the Report

A well designed work always deserves appraisal and greetings. Every work is needed to have a standard methodology to make it quite successful in the course of its preparation.

To make this report the best one as well as a means to further necessary analysis that are...