Concept of Working Capital Management

The concept of working capital management is quite simple to get to grips with. Working capital management refers to the accounts management strategy of a business, where the core aim is to control and efficiently make use of current liabilities and current assets. These are the two components of working capital, which come together to determine the financial efficiency (or otherwise) of the organization. In short, working capital management strategies are implemented to ensure that the business constantly has enough cash available to fulfil its immediate debt obligations and operational costs. When a business begins experiencing problems with working capital, it may find itself in a position where remaining viable is thrown into question.

This premium tutorial provides a comprehensive overview of working capital in financial management for businesses and accountants alike. Along with an exploration of the importance of working capital, key concepts such as determining working capital requirements and controlling working capital under inflation are also covered. Learn how to determine and manage optimal cash flow, measure working capital and ensure the business can always meet its primary financial obligations.