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: The Components of Working Capital Management
Business Corporate Finance & Accounting
The Components of Working Capital Management
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J.B. Maverick is a novelist, scriptwriter, and published author with 17+ years of experience in the financial industry. Learn about our editorial policies
J.B. Maverick
Updated Jul 15, 2019
What Is Working Capital Management? Efficient management of working capital ensures profitability and overall financial health for businesses. Working capital is the cash that companies use to operate and conduct their organizations. Effective working capital management ensures that a company always maintains sufficient cash flow to meet its short-term operating costs and short-term debt obligations. The elements of working capital that investors and analysts assess to evaluate a company determine a company's cash flow. These elements are money coming in, money going out, and the management of inventory. Working Capital Management Deconstructed
Effective working capital management requires coordinating several tasks such as managing short-term investments, granting credit to customers and collecting on this credit, managing inventory, and managing payables. Effective working capital management also requires obtaining reliable cash forecasts and accurate data on transactions and bank balances. If a company has insufficient cash to pay for its current expenses, it may have to file for bankruptcy, undergo restructuring by selling off assets, reorganize, or liquidate.