Section 3
Overview of the Working Capital Financing Decision
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By Boundless
Boundless Finance
Finance
by Boundless
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Evaluating Interest Rates
Management of working capital requires evaluating factors affecting cash flows -- including the evaluation of appropriate interest rates.
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Decision Criteria
The main considerations of working capital management decisions are (1) cash flow/ liquidity and (2) profitability/return on capital.
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Identifying Varying Conditions
Management uses policies and techniques for the management of working capital such as cash, inventory, debtors and short term financing.
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Calculating Expected Value
The main accounts which affect the value of working capital are accounts receivable, inventory, and accounts payable.