What Is The Objective Of Working Capital Management?

Working capital refers to the amount of money that a business has in its current assets and current liabilities. It is an important measure of how well a company can meet its short-term financial obligations. The more working capital available, the better off the company will be.



Objectives of Working Capital Management

Upsurges your profits

Appropriate management of working capital can boost your revenue that you can spend on additional costs, like new equipment, hiring more employees, or you can invest these extra funds in marketing for furthering your business growth.

Ensures capability to face emergencies

Proper management of working capital can ensure extra funds. You may better save these funds for emergencies so that you will not be at risk to pay for repairs, employee salaries, or other necessary costs in the case of an emergency situation.

Ensures enhanced credit score

When you pay back the debts while producing revenue, your operating cycle is financed, and will possibly enhance your credit score. To raise your credit score, you are required to pay your rent, vendor bills, and loan payments on-time.


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