FINANCIAL

MANAGEMENT
TOPIC 10:
WORKING CAPITAL MANAGEMENT

Lecturer: MBA. Nguyen Mai Anh

1. WORKING CAPITAL MANAGEMENT:

Working capital management shows how the working capital should be

financed.
For example: A firm needs to make a decision on how much cash that needs
to be kept in the account and inventory level that needs to be maintained.

Working capital management is obvious in small and medium company

because they have limited alternative financing
1. NET WORKING CAPITAL:

For example:
1.1 NET WORKING CAPITAL:

1. Cash:
2. Marketable Securities (Short term investments)
3. Account Receivables
4. Inventory
2. SHORT-TERM FINANCING
1. Spontaneous Financing:
Spontaneoud Financing exits due to the daily activities of the company.

Main sources for Spontaneous Financing are:

a. Credit Trade:
Credit Trade is credit facility offered by suppliers to customers.

The invoice offers 2% discount if paid within 10 days,

if not, the buyer must pay full amount with 30 days

However, the suppliers offer discount, customers will

bear higher effective cost if the discounts were not
taken
2. SHORT-TERM FINANCING

Solution:
2. SHORT-TERM FINANCING
b. Accruals:
2. SHORT-TERM FINANCING
2. Negotiated Financing:
a. Overdraft:
2. SHORT-TERM FINANCING
2. Negotiated Financing:
b. Short-term Loans:

Solution:
2. SHORT-TERM FINANCING
2. Negotiated Financing:
b. Short-term Loans:
2. SHORT-TERM FINANCING
2. Negotiated Financing:
b. Short-term Loans:
For example:

Solution:
2. SHORT-TERM FINANCING
2. Negotiated Financing:
b. Short-term Loans:

Solution:
2. SHORT-TERM FINANCING
2. Negotiated Financing:
c. Commercial Papers:
2. SHORT-TERM FINANCING
2. Negotiated Financing:
c. Commercial Papers:

Solution:
2. SHORT-TERM FINANCING
2. Negotiated Financing:
c. Commercial Papers:
2. SHORT-TERM FINANCING
2. Negotiated Financing:
d. Factoring:
2. SHORT-TERM FINANCING
2. Negotiated Financing:
d. Factoring:

Solution:
2. SHORT-TERM FINANCING
2. Negotiated Financing:
d. Factoring:
3. CASH CONVERSION CYCLE
4. MANAGEMENT IN MARKETABLE
SECURITIES
4. MANAGEMENT IN MARKETABLE
SECURITIES
Several types of Marketable Securities:
a. Treasury Bills:
• Bills are offered on discount basis
• No interest payment
• Risk-free guarantee
b. Commercial Papers:
• Promissory note issued by large companies to obtain additional capital
• Sold at discounted price
4. MANAGEMENT IN MARKETABLE
SECURITIES
Several types of Marketable Securities:
c. Banker Acceptance:
• Is a draft that is issued by exporters to obtain payment for goods that are sold to customers
who have accounts with the said bank.
• Banker acceptance can be traded in the money market where rate of discount is determined
by the market
d. Negotiable Certificate of Deposit:
• Is a evidence for sum of money that is kept and the certificate investors has the right to obtain
the specific interest rates.