- 6 Marks
FM – MAY 2019 – L2 – Q4b – Working Capital Management
Explain the advantages a company may derive from proper working capital management.
Question
The need for working capital management varies from industry to industry, and they can even vary among similar companies. This is due to several factors, including differences in collection and payment policies, the timing of asset purchases, the likelihood of a company writing off some of its past-due accounts receivable, and in some instances, capital-raising efforts a company is undertaking. Proper management of working capital is essential to a company’s fundamental financial health and operational success as a business.
Required:
Explain FOUR (4) advantages a company may derive from proper working capital management. (6 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Financial health, Liquidity management, Operational success, Working Capital
- Level: Level 2
- Topic: Working Capital Management
- Series: MAY 2019
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