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Working Capital Management


Working Capital Management
Financial Ratio Analysis Heading
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Multiple Choice
True or False
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Managing Working Capital


Working capital management influences both a firm's risks and its expected returns. As such, it is an important determinant of firm value. Investment and financing decisions are interconnected, thus they cannot be made independently. Financial planning will make you think systematically about the relationships among your goals for growth, investment, and financing. After completing this course, you will be aware of the risk-return tradeoffs that are implied in financial forecasting, know the process of financial planning, the importance of managing cash inflows and outflows, how to finance short-term assets, and make the right decisions on financing and investment for your firm.

Target Audience
This course is designed specifically for business managers, financial professionals, and other business professionals who have the need to understand finance and investment in corporations, and to analyze their own business or the performance of another company.

Expected Duration
4.0 hours

Lesson Objectives:

Financial Planning

  • recognize the benefits of financial planning.
  • identify the contents of an effective financial plan in a given scenario.
  • determine how much additional financing a company will require, using the percentage of sales forecasting method.
  • apply the cash budgeting model for a given scenario.
  • determine how much additional financing a company will require, using the pro forma Statement of Cash Flows.
  • choose an appropriate planning model for a business that is using financial forecasting.

    Short-term Financing and Managing Working Capital

  • recognize the benefits of understanding short-term financing and managing working capital.
  • differentiate between unsecured and secured sources, given a list of short-term credit sources.
  • make working capital management and investment decisions for a company.
  • perform an analysis of the financial risk/return tradeoffs of debt financing.

    Cash and Marketable Securities Management

  • recognize the importance of managing cash and marketable securities.
  • match motives for holding cash with appropriate cash management decisions.
  • determine criteria for selecting marketable securities.
  • choose the proper method of managing cash inflows and outflows, given a scenario.

    Accounts Receivable and Inventories Management

  • recognize the importance of accounts receivable and inventories management.
  • calculate the results of a proposed change in accounts receivable policy, given a scenario.
  • choose appropriate inventory management decisions for a firm, given a scenario.

    Course Number: FIN0214

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