Working Capital Management

Working Capital Management Working capital refers to the cash a business requires for day-to-day operations, or more specifically, for financing the conversion of raw materials into finished goods, which a company sells for payment. Working capital management involves the relationship between a firm's short-term assets and its short-term liabilities. The importance of a well-rounded working capital cycle is crucial in today's business environment. Importance of Working Capital Management The goal of working capital management is …

…of raw materials. This is followed by a long-drawn-out manufacturing and testing phase, after which a sale is concluded. The materials and labor costs are incurred "up-front". The money spent on expenses is usually more cash then they generate. Conclusion Managing working capital can be a major challenge for some businesses. Working capital management is crucial in today's business environment. However, managing it well can have a substantial impact on a business' assets and financials.