IA Show Me The Assets

Main Idea

Working Capital Management

What is the total working capital?

Total current assets

What is net working capital?

‫ holds put Assets Current Liabilities

In creating a state of balance between current assets and current liabilities

In order to reflect working capital at a certain level of positive situation of the financial situation

Objective of Working Capital Management

1. To find an appropriate balance between liquidity and profitability and risk.
2. To solve problems resulting from the balance between current assets and current liabilities‫ .

Purposes of working capital management

Defensive

Working capital adequacy ratio to repay liabilities Out short term .

Operational

Net working capital which is keep for operating requirements for fixed assets

Supported credit position

Net working capital gives a margin of safety for creditors

Importance of working capital (current assets)??

1. Felixable
2. Achieving sales size
3. Interview short term liability
4. Achieve the necessary liquidity for operational processes.

‫ Elements of working capital

1. Correlation between profitability, liquidity and risk
2. The necessary mix of funding for working capital

Correlation between profitability, liquidity and risk

Profitability : That particular level of profit after deducting all expenses

Liquidity : Maintain a sufficient amount of working capital for the purpose of providing liquidity to the Foundation

Risk: Financial hardship faced by enterprises during the performance of obligations owed