Working capital management

Working capital management

The deployment of current assets and current liabilities so as to maximize short-term liquidity.

Working Capital Management

An accounting strategy in which a company seeks to maximize its cash flows so as to pay for its current liabilities and operating expenses. Examples of working capital management include active monitoring of accounts receivable and maintaining little short-term debt. Working capital management, if done properly, can help a company improve its earnings and maintain a healthy financial state.
References in periodicals archive ?
A comparison of the firms with the best working capital management and those firms that have an average management, reveals that the gap has expanded remarkably, reflected in an average overinvestment in working capital of USD 46 billion in year 2006 (Payne and Bustos, 2008).
The purpose of this quantitative study is to determine the components which effect the working capital management in fuel and energy sector of Pakistan.
Purpose This research is focusing on working capital management and its effects on profitability for Sugar Industry.
Working capital management is related to balance sheet structure and therefore influence financial management to a certain degree.
Working capital management; strategic techniques and choices.
The company is addressing its working capital management and Fitch believes there is scope to substantially cut the cash drain through improved inventory and receivables focus.
It is during such times that working capital management captures the attention of top management as the corporate goals shift from maximizing profits to securing liquidity.
The ratings are dependent on the management's ability to improve profitability and gaining market share, while maintaining prudent working capital management. Substantial increase in debt profile may impact ratings.
Corporate finance can be divided into three main domains of decision makings: capital budgeting, capital structure, and working capital management. While the former two domains cover the sources and uses of long-term corporate capital, the domain of working capital management focuses on the short-term financing sources (i.e., "current liabilities") and short-term investment uses (i.e., "current assets") of corporate capital.
We remain committed to our prudent working capital management and believe that we are well positioned to deliver on our growing backlog."
The deal will see the firm provide Belgian businesses with enhanced support for their working capital management, cash flow forecasting and management reporting.
Working capital management aims to increase profitability and at the same time to enable firms to repay their mature liability by ensuring their liquidity (Pass and Pike 1996).