Title: Working Capital Management/Working Capital Management Policies
Headings: Working Capital Management
Working Capital Management
Working Capital
Importance of Working Capital Management
Working Capital Trade Off
Advantages of Maintaining Large Current Assets
Advantages of Maintaining Small Current Assets
Working Capital Management Policies
Relaxed Policy or “Fat Cat”
Restricted Policy or “Lean & Mean”
Policy of Zero Working Capital
Moderate Policy
Cash Management
Cash Management Policies
Interest Based Policy
Policy of Cash Flow Synchronization
Speedy Collection Policy
Float Policy
Inventory Management
Inventory Management Issues
Economic Order Quantity (EOQ)
Inventory Shortfall
Inventory Surplus
Seasonal Sales
Cost Associated with Inventory Management
Inventory Management Policies
Latest Dynamic Systems
Just-in-Time (JIT)
Outsourcing
Accounts Receivables Management
A/C Receivable Management Policies
Incentives For Customers
Penalty on Late Payments
Working Capital Financing Policies
Aggressive Policy
Conservative Policy
Moderate Policy
Maturity Matching Principle

Content: Below is the importance of working capital that must be in your mind. Importance of Working Capital Management
One major fact related to the importance of working capital is that it is the measure of the liquidity of the Business. This means that it tells how easily a business can liquidate/sell its current assets to pay its current liabilities. For this purpose, some ratios are applied which are as follows. Current Ratio = Current Assets / Current Liabilities
Quick Ratio or Acid Test Ratio = Current Assets – Inventory / Current Liabilities
Working Capital Trade Off
Working capital management is an important area for any business management, which is related to decisions about how much money should be invested in each category of a current asset. There are certain advantages attached to each decision. Advantages of Maintaining Large Current Assets
If a business makes a policy to maintain the larger proportion of current assets, then it avails the following advantages. The shortage of the raw material is reduced as sufficient cash is available for smooth working of the operations of the business. The liquidity ratio is high which serves as a healthy sign in the credit market. Advantages of Maintaining Small Current Assets
When a business decides to keep a less proportion of current assets, then it gets the following advantages.