Technological Institute of the Philippines

363 Pascual Casal St, Quiapo, Manila, 1001 Metro

Manila

WORKING CAPITAL
MANAGEMENT
FIN 002A-ACTCY21S2 - Financial Management

Submitted by:
Queenmacy Concepcion S. Alquillera
Adliana Colin A. Amistoso
Pamela Jean M. Bonifacio
ACTCY21S2

Submitted to:
Mr. Heherson M. Martinez, CPA
 Technological Institute of the Philippines
363 Pascual Casal St, Quiapo, Manila, 1001 Metro
Manila

The food and beverage industry has registered growth even during the
economic slowdown in comparison to other industries. And, due to large
populations and rising per capita income, the industry is expected to grow in future
as well. However, the industry may face problems due to price hikes of fuel and
recent droughts in some countries. Therefore, efficient working capital
management is crucial for the corporations in the Food and Beverage industry.

Working capital is a strategic management tool to ensure the success of any

organization because it determines its ability to carry out its operations effectively
and efficiently so as to improve its performance. Permanent working capital was
defined as the lowest amount which is invested in current assets that is needed at
all times to accomplish the lowest business activities level. Temporary working
capital was also defined as the amount of working capital that fluctuates with the
business activities from time to time.

Let us first talk about the Management Policy of our chosen company, we
choose McDonald’s Company. As We’ve read in the first part of their policy it is
written that “At Mc Donald’s’ as with any businesses, the success of the whole
depends on each member doing his or her part. Every Employee is important.” The
first thing that we have noticed is that the company is no9t just letting the higher
ups do their jobs but they divided it into every parts.

They also said that “Every employee is important” an that also connects to
the words “the success of the whole depends on each member doing his or her
part”. The Key Element to their companies growth is “Communication” without it
an atmosphere of misunderstanding, distrusts and low productivity prevails in
which in the end affects the most important person in the store-the customer
 Technological Institute of the Philippines
363 Pascual Casal St, Quiapo, Manila, 1001 Metro
Manila

We are also delighted to know that they have an “Open Communication

Policy” which includes that if they have some matters to discuss the just have to
talk to the higher ups.

The portion of total funds utilized to support an organization's day-to-day

operating expenses is referred to as working capital. Working capital is required to
fund current assets such as shares, debtors, marketable securities, short-term loans
and advances, and advance tax payments, among others. The most critical
component in ensuring the organization's liquidity, profitability, existence, and
solvency is effective working capital management. Smith (1980) emphasized the
significance of striking a balance between working capital management's
profitability and liquidity aims. The decision to maximize profitability reduces
adequate liquidity.
Previous research on working capital management and firm performance
analyzed a linear relationship between investment in working capital and firm’s
profitability the studies pointed out that more profitability is achieved with lower
investment in working capital. On the other hand, there is a study conducted
pointed out that companies have an optimal working capital level which balances
costs and benefits to maximize profitability.
Their study suggested that there is a concave relationship between working capital
level and profitability.
McDonalds Corp fundamentals help investors to digest information that
contributes to McDonalds Corp's financial success or failures. It also enables
traders to predict the movement of McDonalds Stock. This fundamental analysis
module provides a way for investors to measures McDonalds Corp's intrinsic value
by examining all of its available economic and financial indicators and drivers,
including the cash flow records, the balance sheet account changes, the income
statement patterns, and various microeconomic indicators and financial ratios
related to McDonalds Corp stock. Please note, this module does not cover all
equities due to inconsistencies in global equity categorizations.
 Technological Institute of the Philippines
363 Pascual Casal St, Quiapo, Manila, 1001 Metro
Manila

McDonalds Corp's Working Capital is a measure of company efficiency and

operating liquidity. The working capital is usually calculated by subtracting
Current Liabilities from Current Assets. It is an important indicator of the firm
ability to continue its normal operations without additional debt obligations.

Most of McDonalds Corp's fundamental indicators, such as

Working Capital, are part of a valuation analysis module that helps investors
searching for stocks that are currently trading at higher or lower prices than their
real value. If the real value is higher than the market price, McDonalds Corp is
considered to be undervalued, and we provide a buy recommendation. Otherwise,
we render a sell signal.

“I accept responsibility for my role in ensuring the integrity of the work

submitted by the group in which I participated.”