Working capital management — Simple math, complex implications
Abstract: Without a robust flow of dollars, even profitability itself may not keep a company in good standing. But many factors play into this essential goal, and one of them is working capital management. This article explains what it is and describes its components. It then looks at three common areas that most affect working capital — receivables, inventory and payables — and explains why working capital management should be part of a business’s overall strategic planning. A sidebar shows why having a surplus of cash is not effective working capital management, but actually a sign of operational inefficiency.