Leaning Online

Financial Management means management of finance or money invested in the business. The efficient use of financial resources in the best possible way. How To Get Finance for the business and how to use the money for the growth of the business and ultimately it is helpful for meeting the objectives of the business.    Financial Management covers four important factors:     1. Estimation of Financial Requirements whether it is fixed or working capital  2. Determination of Capital Structure  3. Procurement of Financial Resources  4. Measurement of Revenues and Savings in the best possible way.  You may also be interested in “ The Process of Financial Management In An Entrepreneur ”    Financial Management is a service function for business and industrial Enterprises. It provides services function in the areas of earnings or spendings or both and owning and borrowing the funds or both....

Here we discuss about Working Capital Management Nature, Purpose and Significance. So let us start: Purpose of Working Capital Management The main objective of WCM is to maintain a balance between liquidity and profitability of the business. Business must have sufficient amount of funds in liquid form but not too much to reduce the level of profitability. In W.C.M, not only those sources, which are utilized for short period of time, normally one year, are studied but also those sources that are used for more than one year. Short-term sources of finance are for variable working capital while long-term sources of finance are for fixed working capital. Nature of Working Capital Management In WCM, the company makes a plan for its resources to meet obligations. This plan should be implemented by taking into account the prevailing nature of the current resources and current obligations. Current resources are assets which have life of one year. Current obligations ...

Here we discuss about Short Term Sources of Working Capital Financing. S.T.F (Short-term finance) is raised by the company in covering day to day expenses and meeting short-term obligations. Short-term financing and Working Capital are related to each other. Short-term financing includes all those financial instruments and techniques adopted by the company to raise the cash needs to meet current obligations. The company may get cash by investing in capital markets, investing in marketable securities and getting business loans from banks. Sources of Short-term Financing   Short-term Financing can be raised by the company through: Ø Spontaneously Financing Ø Negotiating Financing Ø Spontaneously Financing Spontaneously financing is utilized by default in conducting the daily business’s obligations and operating expenses. Forms of Spontaneously Financing Ø Account Payable Ø Outstanding Expenses Ø Account...

Here we study Working Capital Management Decision Definition. WCM helps the company in utilizing its funds from short-term sources and long-term sources because when there is need of financing Working Capital , WCM plays an important role in this regard. The flow and running of the business depends entirely on the efficient use of short-term funds. Every business needs money to meet the daily expenses. The role of WCM is to utilize the current resources of the business in such a way that the current obligations and current operational expenses are met. It helps a company in influencing the decisions of the investors. It can be considered as lifeblood for the running the business. If the company is not managing the working capital effectively then the business suffers due to unavailability of cash to meet daily expenses. It prevents the stoppage of business activities because the liquidity position of the business is strong enough to meet operating expenses, like wages, repairing ...

Here we discuss about How To Find Working Capital that is very important for knowing the liquidity and running conditions of the business. It is the difference between Current Assets and Current Liabilities . It is related to daily operations of the business and without knowing the values of this important indicator, the company running performance may be stopped at any time. The formula for Calculating Working Capital or Net Working Capital Calculation is as follows: Working Capital  =   Current Assets - Current Liabilities The difference between Current Assets and Current Liabilities is favorable if current assets are greater than current liabilities as it shows the potential of the company to meet daily expenses of the business. It also indicates that the Liquidity Position of the company is better to meet short-term obligations. The investors and lenders are interested in the running conditions of the business and this is check...