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WORKING CAPITAL MANAGEMENT
BY: Wilbert C. Venzon, MBA,ip.
WORKING CAPITAL MANAGEMENT
Introduction
All businesses need cash to survive
Cash is needed to:
Invest in fixed assets
Pay suppliers and employees
Fund overheads and other fixed costs
Pay tax due to the Government
WORKING CAPITAL MANAGEMENT
Nearly all businesses use much of their cash resources to finance investment in
“working capital”
Managing working capital effectively is, therefore, a vital part of making sure the
business has enough cash to continue
WORKING CAPITAL MANAGEMENT
What is Working Capital?
WORKING CAPITAL MANAGEMENT
DEFINITION OF WORKING CAPITAL
WORKING CAPITAL MANAGEMENT
WORKING CAPITAL MANAGEMENT
WORKING CAPITAL MANAGEMENT
The Working Capital Cycle
WORKING CAPITAL MANAGEMENT
ILLUSTRATION
WORKING CAPITAL MANAGEMENT
WORKING CAPITAL RATIOS(LIQUIDITY)
WORKING CAPITAL MANAGEMENT
CURRENT RATIO
WORKING CAPITAL MANAGEMENT
ACID TEST (QUICK) RATIO
WORKING CAPITAL MANAGEMENT
INTERPRETATION
WORKING CAPITAL MANAGEMENT
LIMITATION OF LIQUIDITY RATIOS
WORKING CAPITAL MANAGEMENT
DANGER OF OVERTRADING
WORKING CAPITAL MANAGEMENT
OVERTRADING INTRODUCTION
WORKING CAPITAL MANAGEMENT
HOW DOES OVERTRADING HAPPENS?
WORKING CAPITAL MANAGEMENT
SYMPTOMS
WORKING CAPITAL MANAGEMENT
OTHER SOURCES OF LIQUIDITY PROBLEMS
WORKING CAPITAL MANAGEMENT
WAYS TO IMPROVE LIQUIDITY
WORKING CAPITAL MANAGEMENT
KEY TERMS
