IMPORTANCE OF WORKING CAPITAL MANAGEMENT


IMPORTANCE OF WORKING CAPITAL MANAGEMENT

1-      Continuity in the business operation

2-      Dividend payments

3-      Repayments of long term loan

4-      Increase the reputation of company/ credit worthiness

5-      It boost efficiency and productivity

6-      It will increase the good will of the company

7-      It will help to find competition

 EXPLANATION

1-      Working  capital keeps the business operation moving it is needed to purchased raw material to pay the worker and the staff and also to pay the utility expenses

2-      WC needed to pay dividend to shareholder the payments of dividend take place on the yearly or half yearly

3-      WC also used to repay long term loan and debenture. It will be impossible to repay debenture long term, loan and other loans without it

4-      A company that pay creditors  on time means it’s has a positive reputation in the market such as good will helps a company to get the raw material on the credit and it can also get loan and advance from the banks. The dealers are also willing to give the money to such company whose efficiency and productivity is great.

-      The company that faces no working capital had problems to provide better working condition and welfare facilities to its workers it can also maintain its machine input in good condition. It can afford to spend money on training and development on its worker. Such steps   boost the efficiency and productivity of the company.

-      We help to fight its competition. It can be used to advertise and to do sales promotions. Company can also afford to give longer credit terms to the customers.

-      It keeps the business of working capital is required all the year but the sales is every seasonal .if the sales are down money inflows is less therefore liquid cash is requires to pay the wages to the workers and daily expenses

-      The company that have working capital without any difficulty earn a good reputation in the labor and capital market, there it also help to increase the good will of the company



PREVIOUS WE DISCUSS ABOUT WORKING CAPITAL BUDGETING/ MANAGEMENT

link http://therafiamemonibf.blogspot.com/2018/09/working-capital-management-working.html

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