Running Head: CAPITAL MANAGEMENT TECHNIQUES

Capital Management Techniques

Name

Affiliation
CAPITAL MANAGEMENT TECHNIQUES 2

Capital Management Techniques

Evaluate effective working capital management techniques

Working Capital is defined as the ratio of the current assets to the current

liabilities. According to authors, the industry and its type of transaction

determine the efficiency of the working capital. For a company to obtain

effective capital management, integral strategies have to be set. To a

greater extent, working capital has a significant effect on the profit level of

the company. Efficient working capital management is less important in

large scale companies compared to small enterprises. Optimization and

proper administration of the current assets and current liabilities increases

the profit level of the company hence resulting it to proper management of

working capital. Additionally, efficient management of capital consists of

numerous factors to be put in to consideration and these include, nature of

the business, manufacturing policy, nature of the market, presence of raw

materials, chances of expansion of the business and the rate at which prices

change, ( Klara & Markovics, 2016).

Evaluate alternative capital projects

Evaluating capital for investment involves preparation before making any

decision. Cash management is very vital in the day to day operations of a

business. The proper assessment of cash involves ways of planning and

controlling its use in the business. Furthermore, banks and other financial
CAPITAL MANAGEMENT TECHNIQUES 3

institutions offer business loans to help entrepreneurs raise funds required

for the achievement of a certain level of business. Long term funds such as

promoter`s funds are advised to be acquired to finance part of the current

assets of the business since their payment is usually not immediately

required. Additionally, entrepreneurs buy raw materials from suppliers on

credit and pay upon finishing of the project. These funds are expected to be

used to buy current assets such as finished goods due to the short period

given for their payment, ( Klara & Markovics, 2016).

CAPITAL MANAGEMENT TECHNIQUES 4

References

Klara & Markovics, S. (2016).Capital Budgeting Methods Used in Some

European Countries and in the United States. Universal Journal of

Management.