Professional Documents
Culture Documents
Agrim Verma
Working Capital
Contents
NOWC
Operating
Current Liabilities
Operating
Current Assets
Cash
Accounts Payable
Accounts Receivable
Accruals
Inventories
Convertin
g firms
receivable
s into cash
Conversio
n of
materials
into
finished
goods and
then sell
those
goods
Components of CCC
Time
taken for
payment
of
materials
and
labour
Inventory
Conversion
Period
Receivables
Collection
Period
Payables
Deferral
Period
Cash
Conversion
Cycle
Cash Management
The goal of the cash manager is to minimise the
amount of cash the firm must hold for use in
conducting its normal activities, yet, at the same time, to
have sufficient cash
Inventory Management
Goals of inventory management:
To ensure that the inventories needed to sustain
operations are available,
To hold the costs of ordering and carrying inventories
to the lowest possible level
10
Improvements in
Inventory Management
Situation 1: Original
11
Receivables Management
12
Credit Policy
Credit period
Discounts
Credit standards
Collection policy
13
Accruals
Accounts
Payable
14
15
Types of NOWC
Permanent
NOWC
Temporary
NOWC
NOWC on hand at
the low point of the
cycle
As sales increase
during upswing,
additional NOWC
employed
16
Profit level
Production cycle
Level of taxes
Business cycle
Dividend policy
Production policy
Depreciation policy
Credit policy
Operating efficiency
raw material
17
Thank you
18