Capital is the life and blood of the business and it is the main task of the management to ensure that capital flow is constant within the company and the cash flow constantly generates profits. This paper aims at discussing one of the…
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Aspects like the shareholder’s concern regarding the working capital management will also be discussed in the following sections.
Working capital management refers to the money used for the making of goods and sales. It has been defined as, “A managerial accounting strategy focusing on maintaining efficient levels of both components of working capital, current assets and current liabilities, in respect to each other. Working capital management ensures a company has sufficient cash flow in order to meet its short-term debt obligations and operating expenses” (Investor Words, 2010).
Working capital management involves a strong relationship between the short term assets of a company and the short term loans. The main aim of this concept is to ensure that there is enough cash in the firm to continue all the operations. It also aims at keeping enough liquidity for facing both the short term debts as well as the operational expenses. Inventories, accounts receivable and accounts payable and cash fall into the category of working capital management (Study Finance, 2010).
As has been discussed earlier, working capital management is based on the needs of the company and the ability to keep liquidity level at all times. It is essential to be understood that the profit margins of a company and the working capital are inversely proportional to each other. A company with high levels of profit margins generally tend to have a low level of working capital. Similarly a company with low level of working capital will have much higher levels of liquidity (Bhattacharya, 2001). The working capital management mainly deals with the amount of liquidity of the firm and the profitability. The main aim is to ensure that both are in place while dealing with the day to day processes and operations.
The short term and long terms financial planning play a major role in the overall liquidity of the company. The long term
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Non-governmental Organizations are set up to offer services or goods to people with the aim of assisting them though capacity building. Financial management practices in NGO’s are different from the operations of For-Profit organizations. For instance, NGO’s source their funds through donations, sponsors or charitable sources.
The main objective of the financial management is to provide funds for the business. This is the backbone of the business because no firm or company can run without funds. There are many options for availing funds from different quarters. Although the
As understood financial management is a mode of right administration of the financial assets of a company. In the case of large companies the amounts of monies spent on the assets is very high. This requires highly effective financial management. The main
The company has a policy of not accepting projects with a payback period of over 3 years and this project will recover its initial investment in less than 3 years. (Puxty, Dodds, & Wilson, 1988)
Here, Cost of capital the rate of return in which firms earn on its investment to maintain or improve value and also attract fund and capital (Brigham & Houston 2009). It is used as a yardstick in evaluating the desirability of an investment proposal. In
The company offers home and clothing products in addition foods sourced from more than 2000 suppliers from all over the world. Two years ago, the products of the company were also sold through 730 United Kingdom branches and 390 internationally. The
nonprofit organizations and subsequently offers a comparison and distinction between the application of financial management techniques in nonprofit and for-profit organizations. In achieving this, this paper focuses on the sources of funds, use of debt, performance evaluation,
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