Working Capital Management

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Working capital, in general practice, refers to the excess of current assets over current liabilities. Working capital is meant to support the day to day normal operations of an enterprise. This working capital generates the important elements of cost viz., material, wages and expenses. This cost usually leads to production and sales in case of manufacturing concern and sales alone in case of others. One of the distinguishing features of the fund employed as working capital is that it constantly changes its form to drive the business wheel. It is also known as circulating capital which means current assets of a company that are changed in the ordinary course of business from one form to another form. Management of working capital therefore, is concerned with the problems that arise in attempting to manage the current assets, the current liabilities and the inter- relationship that exists between them. The basic goal of working capital management is to manage the current assets and current liabilities of a firm in such away that satisfactory level of working capital is maintained.