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Working Capital Management
Define Working Capital.
Money tied up in raw materials, stocks, finished goods, receivables and cash for day-to-day operations.
Distinguish Gross vs Net Working Capital.
Gross WC = all current assets; Net WC = current assets minus current liabilities (long-term funds cushion).
What are the two objectives of Working Capital Management?
Adequate liquidity to meet obligations; optimal profitability by minimizing idle current assets.
Define Operating Cycle.
Cycle from raw material purchase → production → sale → cash collection → next purchase.
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