Financial Management Strategies: Working Capital Management

Question 1

Control of current assets (cash, receivables, inventories)

Answer 1

Making sure that there is enough cash, receivables and stock in current assets. Making sure that all receivables are recoverable. Making sure all stock is ok and not obsolete.

Question 2

Control of current liabilities (payables, loans, overdrafts)

Answer 2

Keeping current liabilities to a minimum. Repaying these on time.

Question 3

Strategies: Leasing

Answer 3

Renting assets rather than buying them outright so that you pay them off monthly rather than all at once.

Question 4

Strategies: Sale and Lease Back

Answer 4

Selling assets to a leasing company and then renting them back for a monthly charge.