Title: 3 Working Capital Management Strategies For Your Business - QuickBooks
Headings: 3 Working Capital Management Strategies For Your Business
3 Working Capital Management Strategies For Your Business
What is Working Capital Management?
Strategies to Manage Working Capital
1. Inventory Management
2. Cash Management
3. Accounts Receivable Management

Content: Thus, Current assets and current liabilities form the major components of working capital as per the working capital equation. Current Assets typically include: Cash and cash equivalents
Inventory
Accounts Receivable
Marketable Securities
Prepaid Expenses
Other Liquid Assets
Whereas current liabilities include: Accounts Payable
Notes Payable
Current Portion of Long Term Debt
Accrued Liabilities
Unearned Revenues
Hence, mismanagement of any of these components may lead to severe consequences. This may include even going out of business in certain cases. For instance, shortage of cash may result in incapacity of the firm to meet its short term obligations. Similarly, inadequate inventories may put production on hold and force the business to purchase raw materials at exaggerated prices. Hence, lack of working capital may result in business failure. However, adequate working capital gives a push to the business during the days in which there is less business activity. Hence, to produce goods without any obstruction and sustain sales, a business needs funds for inventories and accounts receivable.