TABLE OF CONTENTS
TABLE OF CONTENT
1.1 BUSINESS GUIDING OBJECTIVES
2.1 MEANING OF WORKING CAPITAL
The sole objective of any business in the private sector is to
make profit, but the uncertainly inherent in today’s economic environment threatens the survival of every business and makes sound liquidity and cash management the local point fro financial management rather than achievement of maximum profit.
The deeper study and in creased analytical approach to business finance has red to an ever growing and importance of working capital and it’s influence on the success or otherwise of business operation. It is concerned with the management of the various elements of working capital which include stock, debtor, cash and creditors. Other components of working capital include short term securities, bills payable, prepayment and other current assets. However, working capital management has been variously defined but in a nutshell; it refers directly to planning – organizing, financing and controlling of resources available to the business in order to achieve set of objective or a definite goal.
L.R. Howard puts it this way; working capital may be regarded as the life hood of a business. Its effective provision can do much to ensure the success of a business while it’s in efficient management can lead not only to loss of profit but also to the ultimate downfall of want. Otherwise might be considered as a promissory concern.
It is certain that if skilled working capital management is not available in amount of finance provided will transform a financially weak company with mediocre performance into a strong and dynamic organization enjoying a scintillating regulation.
This research work is a crucial one in the sense that current asses by their very nature are changing daily, if not hourly and management decision must be made.
As B. Chizen puts it this way, that is the imperative of sound management of working capital has assured critical significance in the face of the deteriorating market situation consequently on the unavailability of foreign exchange, essential raw material and other inputs badly required for the optional functioning of the management sector.
It is therefore necessary that available resources of which capital is the most important in any business be optionally utilized, since an established test for the ability of management of an enterprise is the way and management mangers the scare resources entrusted to it.
Excluding over draft, accounting to him overdraft should be excluded because it is revolving liability of non-current nature. Lucy defined management as the direction of enterprise, through the planning, organizing, co-operating and controlling of its human and material resources towards the achievement of a predetermined objective.
Relating to the issue at hand working capital management can then be said to involve the directing, planning, organization, co-coordinating, financing and controlling of resources available to the private and public sector in order to achieve a set out objective or definite goal.
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