Principles of working capital management pdf

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Working capital management is concerned with the problem that arises in attempting to manage the current assets, the current liabilities and the This principle is concerned with planning the total investment in current assets. According to this principle, the amount of working capital invested in each The firm has to invest enough funds in current assets for generating sales. instantaneously. Similarly inventory cannot be converted into cash as and when the Current assets are required for day-to-day opera/ons of the rm. The assets keep changing from one form to another from viz. Stocks, Receivables and Cash. The financial manager must determine the satisfactory level of working capital funds and also the optimum mix of current assets and current liabilities. He must The scope of working capital management can be grouped into two broad areas (i). Profitability and Liquidity and (ii) Investment and Financing Decision. Scope UNIT- 1. Principles of Working Capital Management. Concepts of Working Capital. Concept of Working Capital: The funds invested in current assets are termed A.6 Working capital management refers to the administration of all aspects of current assets, namely cash, marketable securities, debtors and stocks and current