Working capital management concept focuses on the accounting strategy to maintain the efficient levels of both components of working capital, short-term assets and short-term liabilities. This level of the managerial approach is dedicated to check and balance the amount of cash flowing into the business. If you feel researching and writing for assignments can be a tough job for you, you can opt for working capital assignment help. Without doubt, our working capital assignment help service is a smart way to deal with your assignment problems while writing long assignment like working capital thesis.
Objectives of working capital management
Our working capital assignment help tutors describe the objectives of working capital management here:
- Smooth working capital operating cycle: According to the working capital assignment help experts, the operating cycle involves six prior points which are expected to be managed. It starts from fulfilling the requirement of raw material to selling the finished products as soon as possible, and from collecting receivable on time to clear the payable accounts.
- Lowest working capital: Our working capital assignment help experts analyze that if working capital increases, interest cost eventually goes high. Similarly, lower working capital represents risk that disturbs the operating system. Hence, the working capital should be balanced by project management.
- Minimize rate of interest of cost of capital: Our working capital assignment help experts come across that fact that a company should reduce the cost of capital in order to gain more profitability. Our working capital assignment help experts also consider the fact that if the investment in working capital involves bank finance, interest rates should be negotiated with the bank. Cost can be reduced by utilizing long-term funds, but in the proper mix.
- Optimal return on current asset investment: Our working capital assignment help experts observe that the rate of return earned due to investment in current assets should weigh more than the rate of interest or cost of capital for financing the current assets.
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Requirement of working capital
Our experienced working capital assignment help experts analyze if the profitability of a project depends on the magnitude of sales, they do not convert into cash instantly. So our working capital assignment help experts realize the need for working capital in order to deal with the problems. These problems mainly arise from lack of immediate realization of cash against goods sold. This is referred to as ‘operating of cash cycle’.
Concepts of working capital
When you deal with an assignment on the concepts of working capital, you need to reflect proficient knowledge. With working capital management assignment help, you can get professional assistance in every stage of assignment writing on working capital.
- Gross working capital: Our team of working capital assignment help tutors defines gross capital as the current assets (convertible into cash within an accounting year) of the company. Our working capital help experts also state that gross capital includes cash, checking and saving account balances, accounts receivable, short-term investments, inventory and marketable securities.
- Net working capital: The working capital assignment help tutors describe networking capital is used to measure the short-term liquidity of a business and also to determine the ability of company management to utilize assets. Our working capital help experts further state the formula for calculating working capital:
Net Working Capital = Current Assets – Current Liabilities
Influential factors for capital requirement
According to the working capital assignment help tutors, the components that profoundly affect working capital requirement:
- Nature of business
- Phase of trade cycles
- Size of the organization
- Production policies
- Dividend policies
- Turnover of inventories
- Trading terms
- Length of production cycle
- Seasonal variations
- Balanced working capital
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Excessive working capital
Our working capital assignment help experts describe the consequences of excessive working capital as
- Unnecessary inventory accumulation
- Defective credit policy and high collection period
- Marginal inefficiency of the management.
Inadequate working capital
Similarly, our working capital assignment help experts describe the consequences of inadequate working capital as
- Deterioration in growth
- Difficulties in implementing operating plans
- Reduction in efficiency of the operating system
- Fixed assets that cannot be utilized
- Banks’ refusal to extend credit
- Goodwill of the firm affected.
Approaches towards working capital management
Our working capital assignment help tutors illustrate the numerous ways to maintain the balance of working capital. If you want to know more, you can always consider taking working capital assignment help from professional working capital assignment help writers.
Here are three approaches discussed by our working capital assignment help experts:
- Hedging Approach: According to the working capital help experts, in hedging approach, the maturity of the sources of the funds should match the nature of the assets. The long-term funds should be used to finance the fixed portion of current assets requirements. Short-term funds should finance the purely temporary needs. Therefore, the requirements of total funds are divided into permanent and seasonal components, each being financed by a different source.
- Conservative approach: According to our working capital assignment help experts, long-term sources should satisfy the estimated requirement of total funds. The use of short-term funds should be restricted to only emergency situations or when there is an unexpected outflow of funds.
- Aggressive Approach: Our working capital assignment help experts suggest that the firm must decide to finance a part of the permanent working capital by short-term sources. This policy can be used to minimize excess liquidity while meeting the short-term requirements. This way, the firm may accept greater risk of insolvency in order to save cost of long-term funds.
While implementing these approaches, one should remember the following factors defined by our working capital assignment help experts:
- Flexibility of the mix
- Cost of financing
- Risk attached with financing mix
- The ways to manage cash in the business.
Ways to manage cash in the business
Here our working capital assignment help experts give two examples of how firms manage cash within the business:
- Sales: Our working capital assignment help experts state the prior goal of sales is cash management. This policy is implemented to shorten the amount of time before the company receives the cash. The company makes the sales on credit, so that it can decrease the amount of time.
- Inventory: Our working capital assignment help experts state that inventory is used to put off the payment of cash for as long as possible and manage the cash being held. Our working capital assignment help experts mention that if you use JIT inventory system, your firm would be able to avoid paying for the inventory until it is needed. At the same time, you can avoid carrying the cost on the inventory.
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