ASSIGNMENT 4

WORKING CAPITAL MANAGEMENT

Answer the following questions.
1. Based on what you observe in your household daily, how do you think your parents maintain the revolving fund in
order to support the family’s daily needs? (5 PTS)

- Since there are five of us in this household, my mother is usually the one who handles financial matters. My
mom would always put needs and necessities first on the list before everything. She do groceries on payday,
pay monthly tuition of my sister, pay electric and water bills and making sure every needs are secured before
putting expenses on wants. We find it challenging to save a lot of money because my older sister is in college
and she’s currently living in a dorm, I’m about to graduate and enter college too, and my younger sister is still
in elementary school, but my mother has always made sure that there is always room for our wants on the list.
She would always save every receipt she got from a purchase, even from a gas station, since she would
compute them all up and know where every penny went instead of just spending it all.

2. How can you help your parents about handling the funds of your family? (5 PTS)

- I've always enjoyed helping my parents limit their expenditures because I'm the middle kid. I was never the "buy
me that, buy me this" kind of kid. I was the child, though, who my parents would encourage to ask for what I
wanted. I believe I brought that up until this point, as a young adult. I would use my own allowance, which I had
saved from the leftover funds, to make purchases when I wanted to. I'm also very giving when it comes to gifts,
but anytime I buy something for myself, I make myself feel bad and tell myself I don't deserve it and I should
simply save up for it the next time, which is why I sometimes think I help my parents to save.

3. How do you relate or apply the concept of working capital even to micro businesses like sari-sari store, a barbecue
stand or a small online shop? Explain your answer. (10 PTS)

- Working capital, which is the difference between a business’s current assets and current liabilities or debts, is
used by a business in its everyday operations. A measure of a business’s operating effectiveness and short-
term financial stability is its working capital. This idea can be applied to tiny enterprises like sari-sari stores. The
money that their consumers give is also the money that they use to purchase additional things to sell, with the
exception that the profit they make is the stuff they'd keep. The same is applicable for barbecue stands; the
money that customers pay is also the money that the vendors use to purchase additional barbecued porks,
blood, intestines, barbecue sauces, and other items that they will offer to customers the following day.
Therefore, it turns into a cycle, a cycle in the financial realm, with the only distinction being that these merchants
profit more as a result. They pay for the materials they would buy for another sale using the same money that
customers would spend. Not only that applies for small businesses like small online shops, barbecues, and
sari-sari stores but it applies to every business there is, entrepreneurs rotate the money in the business and
they gain more from it.