Balance Sheet

Balance Sheet

Working Capital
1. The Working Capital is defined as the current capital used in day to day business operations for a company
  1. Working Capital is used to measure both company efficency and it´s short term financial health
    1. It also can denote the operating liquidity for a business
Net Working Capital
1. Can be defines easily as the current assets minus current liabilities
  1. It will show if our current assets will be able to pay the current liabilities
    1. NWC might be missleading due to the following concepts
      1. Lines of Credit
      2. Anomalies
      3. Liquidity
2. Current Accounts required to get the Net Working Capital
  1. Current Assets
  2. Current liabilities
Management of Net Working Capital
1. A managerial accounting strategy focusing on maintaining efficient levels of both components of working capital.
  1. Its split into 2 concepts in respect to each other
    1. Current Assets
    2. Current Liabilities
      1. Working capital management ensures a company has sufficient cash flow in order to meet its short-term debt obligations and operating expenses.
Profitability and Risk
1. Used to project future profitability based on an analysis of past performance
2. Cross-Selection analysis of Risk
  1. Competitors
  2. Industry Averages

Resource summary

	Created by alejandrogarzax about 11 years ago