Working Capital Management (PowerPoint PPT Slide Deck)

Every company always needs funds to finance its daily operations. For example, to provide additional purchases of raw materials, pay labor wages, employee salaries, and so on, where the money or funds that have been spent are expected to be able to return to the company in a timely manner, namely through the sale of its production. The money that comes in from the sale of these products will be immediately released again to finance further operations. Thus, these funds will continue to rotate every period during the life of the company. Funds used to finance the company's day-to-day operations are called working capital.

Working Capital Management (WCM) is a business strategy designed to ensure that an organization operates efficiently by monitoring and using its current assets and liabilities to their most effective use. The efficiency of WCM can be quantified using ratio analysis.

Working Capital Management includes the management of elements of current assets and elements of current debt. Working capital policies shows the basic decisions regarding the target of each element of current assets and how these current assets are spent. The purpose of WCM is to manage current assets and current liabilities in order to obtain proper net working capital and ensure the company's liquidity level. and funding (especially current or short-term liabilities) needed to support current assets.

Working Capital Management aims at a more efficient use of the organization'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. WCM is key to the cash conversion cycle (CCC), or the amount of time a firm uses to convert working capital into usable cash. Thus, Working Capital Management can improve a company's cash flow management and earnings quality through the efficient use of its resources.

This 40+ slide PowerPoint presentation on Working Capital Management (PPT) discusses the following topics:

1. Alternative working capital policies
2. Cash, inventory, and A/R management
3. Accounts payable management
4. Short-term financing policies
5. Bank debt and commercial paper
6. Cash Conversion Cycle
7. Elements of Credit Policy
8. What's the goal of cash management?
9. Ways to Minimize Cash Holdings
10. Cash Budget: The Primary Cash Management Tool
11. What are some other potential cash inflows besides collections
12. Should depreciation be explicitly included in the cash budget?
13. How could bad debts be worked into the cash budget?
14. Inventory Management: Categories of Inventory Costs
15. Do firms have much control over amount of accruals
16. What is trade credit?
17. What are the disadvantages of short-term debt vs. long-term debt?

This Working Capital Management PPT begins with an introduction to some basic definitions (and formulas) for gross working capital, net working capital, net operating working capital (NOWC), WCM, and working capital policy. It also uses an illustrative example of a hypothetical company (SKI) throughout the presentation.