Summary: Working Capital Management - Corporate Finance [EMNF2724]
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Course
EMNF2724 (EMNF2724)
Institution
University Of The Freestate (UFS)
Book
Corporate Finance
Notes of a second year student studying Bachelors of Accounting at the University of the Free State. With this notes that i have compiled, i was able to proudly say that i received a distinction in Financial Management by using this notes. If you are struggling with Financial Management use this no...
Summary: Ratio Analysis - Corporate Finance [EMNF2724]
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Written for
University of the Freestate (UFS)
EMNF2724 (EMNF2724)
All documents for this subject (13)
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Content preview
Working Capital Management
1. Acquire the WACC.
finances. Capital Structure. Long – term
2. How to spend the Investment Appraisal.
finances. Capital Budgeting.
3. Managing day-to-
Working Capital Management
day activities.
Net WC = CA – CL
(Current ratio)
Are we able to cover short-term debts with our short-term assets?
Just enough Working Capital = Meet our primary goal:
Shareholders value.
Risks involved with working capital.
Too much Too little
1. Theft
1. Not meeting demand
2. Damage
Inventory 2. in Sales
3. Obsolete
3. in Customer Goodwill
4. storage costs
1. in Current ration
Debtors 1. in Bad debts
2. Lose potential sales
1. possibility of theft
1. Unable to pay off debt
2. Opportunity cost: loss of
Cash 2. No petty cash available
interest if invested
for customers
3. Need security
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