Financial Management - Essay Example
Aspects like the shareholder’s concern regarding the working capital management will also be discussed in the following sections.
Working capital management refers to the money used for the making of goods and sales. It has been defined as, “A managerial accounting strategy focusing on maintaining efficient levels of both components of working capital, current assets and current liabilities, in respect to each other. Working capital management ensures a company has sufficient cash flow in order to meet its short-term debt obligations and operating expenses� (Investor Words, 2010).
Working capital management involves a strong relationship between the short term assets of a company and the short term loans. The main aim of this concept is to ensure that there is enough cash in the firm to continue all the operations. It also aims at keeping enough liquidity for facing both the short term debts as well as the operational expenses.
