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  • Chapter (7) Working Capital Management

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    Nyein Pyae Pyae Aung
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    Working capital is required to ensure a business has sufficient current assets to meet short-term obligations as they arise. It is calculated as current assets minus current liabilities. Inventory holding periods contribute to working capital requirements. For example, raw materials are kept for 5 weeks on average and work in process inventory takes 2 weeks on average to complete, including 1 week on average in the production cycle. Finished goods also need to be held in inventory for 2 weeks on average before sale. Receivable collection periods, which is the time taken to collect payment from customers, also impacts working capital. On average it takes 9 weeks to collect payment. Current liabilities must also be accounted for as part of working capital.

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    Working capital is required to ensure a business has sufficient current assets to meet short-term obligations as they arise. It is calculated as current assets minus current liabilities. Inventory holding periods contribute to working capital requirements. For example, raw materials are kept for 5 weeks on average and work in process inventory takes 2 weeks on average to complete, including 1 week on average in the production cycle. Finished goods also need to be held in inventory for 2 weeks on average before sale. Receivable collection periods, which is the time taken to collect payment from customers, also impacts working capital. On average it takes 9 weeks to collect payment. Current liabilities must also be accounted for as part of working capital.

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    © All Rights Reserved
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    14 views2 pages

    Chapter (7) Working Capital Management

    Uploaded by

    Nyein Pyae Pyae Aung
    Working capital is required to ensure a business has sufficient current assets to meet short-term obligations as they arise. It is calculated as current assets minus current liabilities. Inventory holding periods contribute to working capital requirements. For example, raw materials are kept for 5 weeks on average and work in process inventory takes 2 weeks on average to complete, including 1 week on average in the production cycle. Finished goods also need to be held in inventory for 2 weeks on average before sale. Receivable collection periods, which is the time taken to collect payment from customers, also impacts working capital. On average it takes 9 weeks to collect payment. Current liabilities must also be accounted for as part of working capital.

    Copyright:

    © All Rights Reserved
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    of 2

    Chapter (7)

    Working Capital Management


    Working capital requirement
    rdrd\ vufxJwGif&SdaomaiGudk zero [k ,lqNyD; vkyfief;opfwpfck vkyfudkif&ef? product
    topfwpfck xkwfvkyf&eftwGuf vnfywfaiGt&if;tESD;(working capital) b,favmuf
    vdktyfovJ[k wGufcsufjcif;jzpfonf/

    working capital = current assets – current liabilities

    Inventory holding investment


    Raw material holding periods
    tqifoifh xkwf,loHk;pGJEdkif&eftwGuf ukefMurf;*dka'gifxJwGif xm;&Sd&onfh tcsdefumv
    jzpfonf/ Oyrm (5)ywf Mumjrifhrnfqdkygu ¤if;tqifh raw material (ukefMurf;)twGuf
    aiG(5)ywfpm vkdtyfrnfjzpfonf/ Labour & overhead twGuf uawmh rvdktyfao;yg/

    Production cycle periods (WIP)


    ukefMurf;rS ukefacsmjzpfonftxd xkwfvkyf&rnfh xkwfvkyfrIMumjrihfcsdefjzpfonf/ Oyrm
    (2)ywf Mumjrifhrnfqdkygu ¤if;tqihf material twGuf aiG(2)ywfpm vkdtyfrnf
    jzpfaomfvnf; labour & overhead twGufuawmh wpf0ufpDjzpfaom (1)ywfpmpDom
    aiGvdktyfrnf jzpfonf/(wpf0ufpDNyD;onf[k ,lqvdkufonfhoabm/)

    Finished goods inventory holding periods


    tqifhoifha&mif;csEdkif&eftwGuf ukefacsmrsm; *dka'gifwGifxm;&Sd&rnfh tcsdefumvjzpfonf/
    Oyrm (2)ywf Mumjrifhrnfqdkygu ¤if;tqifh material, labour, overhead wdkYtwGuf
    aiG(2)ywfpmpD vkdtyfrnfjzpfonf/
    Receivable collection periods (aMuG;aumufcH &&Sdrnfhtcsdefumv)
    vkyfief;rSukefypönf;rsm;udk taMuG;a&mif;csxm;aom customer qDrS taMuG;&&Sd&ef
    apmifhqdkif; ae&aom tcsdefumv jzpfonf/ Receivable udkapmifhqdkif;&jcif;onf
    tjrwfaiGudkyg apmifhqdkif;&jcif;yifjzpfonf/ Oyrm (9)ywfMumjrifhrnfqdkygu ¤if;tqihf
    material, labour, overhead wkdYtjyif Profit twGufyg aiG (9)ywfpmpD vdktyfrnf
    jzpfonf/

    Current liabilities
    Current liabilities rsm;onf working capital vdktyfcsufrsm;udk avsmhenf;oufomap
    ygonf/

    Cost per unit udk ay;xm;&if wGuf&rnfhyHkpH

    Holding value ($) = no. of weeks x units per week x cost per unit

    Cost per year udk ay;xm;&if wGuf&rnfhyHkpH

    Cost per year


    Holding value ($) = no. of days x
    365 days

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