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WORKING CAPITAL
MANAGEMENT
BY:Wilbert C.Venzon, MBA,ip.
WORKINGCAPITAL
MANAGEMENT
Introduction
All businesses need cash to survive
Cash is needed to:
 Invest in fixed assets
 Pay suppliers and employees
 Fund overheads and other fixed costs
 Pay tax due to the Government
WORKING CAPITAL MANAGEMENT
WORKING CAPITAL MANAGEMENT
Nearly all businesses use much of their cash
resources to finance investment in “working
capital”
Managing working capital effectively
is, therefore, a vital part of making sure the
business has enough cash to continue
What isWorking Capital?
WORKING CAPITAL MANAGEMENT
DEFINITION OFWORKING CAPITAL
WORKING CAPITAL MANAGEMENT
WORKING CAPITAL MANAGEMENT
WORKING CAPITAL MANAGEMENT
TheWorking Capital Cycle
WORKING CAPITAL MANAGEMENT
ILLUSTRATION
WORKING CAPITAL MANAGEMENT
WORKING CAPITAL RATIOS(LIQUIDITY)
WORKING CAPITAL MANAGEMENT
CURRENT RATIO
WORKING CAPITAL MANAGEMENT
ACIDTEST (QUICK) RATIO
WORKING CAPITAL MANAGEMENT
INTERPRETATION
WORKING CAPITAL MANAGEMENT
LIMITATION OF LIQUIDITY RATIOS
WORKING CAPITAL MANAGEMENT
DANGER OF OVERTRADING
WORKING CAPITAL MANAGEMENT
OVERTRADING INTRODUCTION
WORKING CAPITAL MANAGEMENT
HOW DOES OVERTRADING HAPPENS?
WORKING CAPITAL MANAGEMENT
SYMPTOMS
WORKING CAPITAL MANAGEMENT
OTHER SOURCES OF LIQUIDITY
PROBLEMS
WORKING CAPITAL MANAGEMENT
WAYSTO IMPROVE LIQUIDITY
WORKING CAPITAL MANAGEMENT
KEYTERMS
WORKING CAPITAL MANAGEMENT

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Wvenzon workingcapital