BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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how a firm can best manage its cash flows as they arise in its day-to-day operations.
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how a firm should raise money to fund its investments.
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what long-term investments a firm should undertake.
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managing a firm’s capital stock.
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Detailed explanation-1: -Working capital management aims at more efficient use of a company’s resources by monitoring and optimizing the use of current assets and liabilities. The goal is to maintain sufficient cash flow to meet its short-term operating costs and short-term debt obligations and maximize profitability.
Detailed explanation-2: -Achieving a higher net working capital calculation can be achieved by reducing slow-moving inventory, increasing the inventory turnover cycles, and avoiding stockpiling. Although inventory is considered an asset in the working capital formula, less inventory on the shelves equates to more freed up cash flow.
Detailed explanation-3: -Efficient working capital management helps ensure your business runs smoothly and includes managing your inventory, accounts receivables, and accounts payables. It also takes maintaining both your short-term assets and liabilities to ensure you have the liquid funds necessary to run your day-to-day operations.