Working Capital Management
                     WORKING 
CAPITAL 
MANAGEMENT
WHAT IS 
WORKING 
CAPITAL 
MANAGEMENT?
Working capital management 
refers to the set of activities 
performed by a company to 
make sure it got enough 
resources for day-to-day 
operating expenses while 
keeping resources invested in a 
productive way.
Source: corporatefinanceinstitute.com
OBJECTIVES OF 
WORKING 
CAPITAL 
MANAGEMENT
Working capital management isn’t 
that simple, and there can be 
multiple objectives of a working 
capital management program, 
including:
• Meeting obligations
• Growing the business
• Optimizing capital performance
Source: corporatefinanceinstitute.com
WHY WORKING 
CAPITAL 
MANAGEMENT IS 
IMPORTANT?
Ensuring that the company 
possesses appropriate resources 
for its daily activities means 
protecting the company’s 
existence and ensuring it can 
keep operating as a going 
concern. 
Source: corporatefinanceinstitute.com
WHY WORKING 
CAPITAL 
MANAGEMENT IS 
IMPORTANT CONT.
Scarce availability of cash, 
uncontrolled commercial credit 
policies, or limited access to 
short-term financing can lead to 
the need for restructuring, asset 
sales, and even liquidation of the 
company.
Source: corporatefinanceinstitute.com
FACTORS THAT 
AFFECT 
WORKING 
CAPITAL NEEDS
ENDOGENOUS 
FACTORS
Endogenous factors include a 
company’s size, structure, and 
strategy.
Source: corporatefinanceinstitute.com
EXOGENOUS 
FACTORS 
Exogenous factors include the 
access and availability of 
banking services, level of interest 
rates, type of industry and 
products or services sold, 
macroeconomic conditions, and 
the size, number, and strategy of 
the company’s competitors.
Source: corporatefinanceinstitute.com
MANAGING 
LIQUIDITY
Properly managing liquidity ensures 
that the company possesses enough 
cash resources for its ordinary 
business needs and unexpected 
needs of a reasonable amount. 
It’s also important because it affects 
a company’s creditworthiness, which 
can contribute to determining a 
business’s success or failure.
Source: corporatefinanceinstitute.com
MANAGING 
ACCOUNTS 
RECEIVABLES
A company should grant its 
customers the proper flexibility or 
level of commercial credit while 
making sure that the right amounts 
of cash flow in via operations.
Source: corporatefinanceinstitute.com
MANAGING 
INVENTORY
Inventory management aims to 
make sure that the company keeps 
an adequate level of inventory to 
deal with ordinary operations and 
fluctuations in demand without 
investing too much capital in the 
asset.
Source: corporatefinanceinstitute.com