Title: The Components of Working Capital Management
Headings: The Components of Working Capital Management
The Components of Working Capital Management
What Is Working Capital Management?
Working Capital Management Deconstructed
Key Takeaways
1. Accounts Receivable
2. Accounts Payable
3. Inventory
Working Capital Management in a Nutshell

Content: Companies may delay payments as long as is reasonably possible with the goal of maintaining positive credit ratings while sustaining good relationships with suppliers and creditors. Ideally, a company's average time to collect receivables is significantly shorter than its average time to settle payables. 3. Inventory
Inventory is a company's primary asset that it converts into sales revenues. The rate at which a company sells and replenishes its inventory is a measure of its success. Investors also consider the inventory turnover rate to be an indication of the strength of sales and how efficient the company is in its purchasing and manufacturing. Low inventory means that the company is in danger of losing out on sales, but excessively high inventory levels could be a sign of wasteful use of working capital. Working Capital Management in a Nutshell
Working capital management represents the relationship between a firm's short-term assets and its short-term liabilities. The goal of working capital management is to ensure that a company can afford its day-to-day operating expenses while, at the same time, investing the company's assets in the most productive way. A well-run firm manages its short-term debt and current and future operational expenses through its management of working capital, the components of which are inventories, accounts receivable, accounts payable, and cash.