Working Capital Management

Introduction

Management of working capital as stated in business dictionary, “The process of managing activities and processes related working capital. The level of management services as a check and balance system ensures that the amount of cash flowing into a business is enough to sustain a company’s operations. This is an ongoing process that needs to be evaluated using current level of assets and liabilities. Such a working capital involves implementing short-term decisions which can or cannot carry over from earnings period to the next (www.businessdictionary.com)”.

The main purpose for the working capital management is to continue its operations with the sufficient ability in satisfying both maturing short-term debt as well as upcoming operational expenses in a firm. Inventories, accounts receivable, payable, and cash are all managed by the working capital management with the necessary of a well working capital management system needs to continue to be a way for many companies to improve their earnings. Ratios analysis and management of individual components of a working capital are two main aspects of this capital.

The working capital practices of George’s Trains

George’s Trains working capital is unique in every way, but there is a difference between its total current assets and total current liabilities. Since the total current assets is more than the total current liabilities, then George’s Trains net working capital will be positive instead of being negative. Then there is a fair amount of contribution this firm has as of made by the owner. With carefully looking at the video more than once, I notice how slowly the business activity for George’s Trains improved with him offering certain days of credit to c...

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...alty in trading, sales, and in repairing model trains with also model accessories. So with all being said, George’s Trains have been managed well in its ratio between current assets and liabilities.

Reference

Working capital management. Retrieved April 24, 2014, from http://www.businessdictionary.com/definition/working-capital-management.html

Working capital management. (1999-2014). Retrieved April 24, 2014, from http://www.studyfinance.com/lessons/workcap/

Gallant, C. (2009). What are the disadvantages of using net present value as an investment criterion? Retrieved April 25, 2014, from http://www.investopedia.com/ask/answers/06/npvdisadvantages.asp

Management of Working Capital Case Study: “George’s Trains”. (2013). Retrieved April 25, 2014, from http://www.researchomatic.com/management-of-working-capital-case-study-georges-trains-170012.html