The analogy has often been made that cash is the lifeblood of any business. Takeit away and the business will surely expire. A transfusion will miraculously bring the patient back from the brink of death, but only if,
The blood is of the right kind
The problem causing the leakage is attended to.Many companies are interested in increasing their profits. However, very fewcompanies worry about managing the Working Capital. Many companies fail due to bad management of Working Capital. They may be profitable, but they are not able to pay their bills.Cash is the lifeline of a company. If this lifeline deteriorates, so does thecompany’s ability to fund operations, reinvest and meet capital requirements and payments. Understanding Company’s cash flow is essential to make investmentdecisions. A good way to judge a company’s cash flow prospects is to look at itsWorking Capital Management. The better the company manages its Working Capital,the less the company needs to borrow. Even companies with cash surpluses need tomanage Working Capital to ensure that those surpluses are invested in ways that willgenerate suitable returns for investors.Working Capital Management involves the relationship between a company’sshort term assets and its short term liabilities. The goal of Working CapitalManagement is to ensure that a company is able to continue its operations and that ithas sufficient ability to satisfy both maturing short term debt and upcomingoperational expenses. The management of Working Capital involves managinginventories, accounts receivable and payable and cash management.Thus, an attempt has been made to study the management of Working Capital.