5
WORKING CAPITAL MANAGEMENT
LEARNING OBJECTIVES
• Define working capital
• Understand working capital management strategies
• Construct a cash budget
• Understand receivables and payables management
Working Capital
Current assets and current liabilities.
Net Working Capital
The difference between current assets and current liabilities.
Although noncurrent assets provide the capability to provide services, it is the combination of current assets and current liabilities that turns that capability into service. For example, an x-ray machine is useless without an adequate supply of film on hand or cash to pay the radiation technologists. This chapter begins with a discussion of working capital and then focuses on the management of two primary components ...
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