Section 2
Approaches to Working Capital Financing
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By Boundless
Boundless Finance
Finance
by Boundless
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Understanding the Needs of the Business
Working capital needs will vary depending on the type of the business and its operational requirements.
Long-Term Approach
Recognize the broader objectives of working capital, and the way in which organizations can consider a long-term perspective when viewing the utilization of working capital.
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Short-Term Approach
Decisions relating to working capital are usually short-term, since it is the difference between current assets and current liabilities.
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Choosing a Policy
A firm will use a combination of policies for managing working capital, focusing on cash flow, liquidity, profitability, and capital return.