Title: Advantages and Disadvantages of Working Capital Management | eFinanceManagement
Headings: Advantages and Disadvantages of Working Capital Management
Advantages and Disadvantages of Working Capital Management
What is Working Capital Management?
Advantages of Working Capital Management
Ensures Liquidity
Evades Interruptions in Operations
Enhance Profitability
Improves Financial Health
Value Addition
Disadvantages of Working Capital Management
Only Monetary Factors
Non-Situational
Based On Data
Problem in Interpretation
Conclusion
Sanjay Bulaki Borad

Content: Advantages of Working Capital Management
Ensures Liquidity
Businesses often get in trouble due to lack of cash needed for operations and to repay short-term debts. It happens because of an ineffective or no working capital management policy in the enterprise. Working capital management ensures liquidity by monitoring of account receivables, account payable, stock management and debt management. It assists in keeping sufficient liquid cash in the business at any point of time to pay operational costs and short-term debts. Thus, it helps in allocating the resources in an optimum manner. Evades Interruptions in Operations
Working capital management involves the use of ratio analysis. Ratios like working capital ratio, quick ratio, accounts receivables turnover ratio, etc. are calculated and interpreted so as to provide information to management. Such information helps managers in planning and executing business operations in the most efficient way. Optimum use of working capital management evades any future hindrances in business operations.