Introduction Working capital management

Working capital refers to that part of the firms capital which is required for financing shortterm or current assets such as cash, marketable securities, debtors & inventories. Funds, thus, invested in current assts keep revolving fast and are being constantly converted in to cash and this cash flows out again in e change for other current assets. !ence, it is also known as revolving or circulating capital or short term capital. Working capital management is concerned with the problems arise in attempting to manage the current assets, the current liabilities and the inter relationship that e ist between them. "he term current assets refers to those assets which in ordinary course of business can be, or, will be, turned in to cash within one year without undergoing a diminution in value and without disrupting the operation of the firm. "he ma#or current assets are cash, marketable securities, account receivable and inventory. $urrent liabilities ware those liabilities which intended at there inception to be paid in ordinary course of business, within a year, out of the current assets or earnings of the concern. "he basic current liabilities are account payable, bill payable, bank over-draft, and outstanding e penses. "he goal of working capital management is to manage the firms current assets and current liabilities in such way that the satisfactory level of working capital is mentioned.