Working Capital Management

Working capital is the capital available for conducting the day-to-day operations of an organization. This is normally the excess of current assets over current liabilities. Working capital management is the management of all aspects of both current assets and current liabilities, to minimize the risk of insolvency while maximizing the return on assets.

Investing in working capital has a cost, which can be expressed either as:

• The cost of funding it, or
• Opportunity cost of lost investment, these are opportunities because cash is tied up and unavailable for other uses.

Course Key Concepts: Working capital management, Elements of working capital, the working capital cycle, the investment in working capital and working capital ratios.