Working Capital Management

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WORKING CAPITAL MANAGEMENT 3

WorkingCapital Management

WorkingCapital Management

Workingcapital management entails the relationship between the short-termassets and the long-term liabilities in a firm. Its main is ensuringthat firms have the ability to continue with operations, while at thesame time having enough ability to satisfy upcoming operationalexpenses as well as short-term debts which are maturing. The biggestproblem facing WCM is lack of enough specialists to offer expertresources useful in driving cross-functional improvements in WCM.This is based on the premise that WCM is a dynamic aspect, thusrequires continuous improvement to offer higher corporate values(PwC, 2015). The main problem facing current assets management isthe inability to readily convert some of the inventories into readilyavailable cash when urgently required. Though there are notablechanges which have been done by governments and stakeholders acrossthe world regarding short term financing, it is clear that this issueremains an enormous challenge to firms. This is due to the fact thatmajority of firms lacks adequate owners capital in additional to astrong case in supporting the viability of firms. There is also thelack of collaterals like inventories and account payables, all whichis crucial to creditors (First for Sustainability, 2015).

ThoughI have not invested in bonds, my parents have been keen on the issueof bond valuation as it helps them in making decision whether toinvest in certain bonds. Through bond valuation, my parents areable to understand whether there are potentiality of priceappreciation and growth of issuing companies (Ulrici, 2007). One ofthe issues I have had adequate experience is the acquisition ofshort-term financing. This is after we tried to acquire a loan from alocal bank to finance our cyber café. However, we failed to getfunds due to lack of strong inventories, thus forcing us to makepersonal contributions.

References

PwC(2015). WorkingCapital Management.Available at http://www.pwc.com/gx/en/services/advisory/deals/working-capital-management.htmlFirstfor Sustainability (2015). Riskin Short-Term Finance.Available at https://firstforsustainability.org/risk-management/understanding-environmental-and-social-risk/environmental-and-social-risk-for-financial-institutions/risk-in-short-term-finance/Ulrici,V. (2007). BondValuation in Emerging Markets. JosefEul Verlag GmbH

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