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A company can be endowed with assets and profitability but short of liquidity if its assets cannot readily be converted into cash. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable and payable and cash.

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Blogs for Working Capital

The Working Capital Blog

If you are in need of working capital finance services, and you'd like to ... It generates working capital – The primary purpose of accounts receivable ...www.farwestcap.com/blog/

Working Capital — Blogs, Pictures, and more on WordPress

Blogs about: Working Capital ... Working Capital & Restructuring Blog ... Recent economic developments made working capital even more essential part of ...en.wordpress.com/tag/working-capital/

working capital management | Business Financing, Accounts Receivable ...

Capital Matters, The Receivables Exchange blog focuses on small business financing and working capital management issues that face small & mid-sized businesses. It ...blog.receivablesxchange.com/blog/?Tag=working+capital+manage...

CFO Blog - Globalization's Hidden Cost - CFO.com

... for senior finance executives. Daily stories include original reporting on new accounting standards, recent capital ... our annual working capital survey. ...www.cfo.com/blogs/index.cfm/detail/9024359?f=TodayInFinance0...

CFO Blog - CFO.com

... for senior finance executives. Daily stories include original reporting on new accounting standards, recent capital ... Home : CFO Blog. WORKING CAPITAL ...www.cfo.com/blogs/index.cfm?d=&t=5&start=230

Wikipedia About Working Capital

2005private_sector_credit.PNG

A company can be endowed with assets and profitability but short of liquidity if its assets cannot readily be converted into cash. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable and payable and cash.

Calculation

Current assets and current liabilities include three accounts which are of special importance. These accounts represent the areas of the business where managers have the most direct impact:

  • accounts receivable (current asset)
  • inventory (current assets), and
  • accounts payable (current liability)

The current portion of debt (payable within 12 months) is critical, because it represents a short-term claim to current assets and is often secured by long term assets. Common types of short-term debt are bank loans and lines of credit.

An increase in working capital indicates that the business has either increased current assets (that is received cash, or other current assets) or has decreased current liabilities, for example has paid off some short-term creditors.

Implications on M&A: The common commercial definition of working capital for the purpose of a working capital adjustment in an M&A transaction (ie for a working capital adjustment mechanism in a sale and purchase agreement) is equal to:

Current Assets - Current Liabilities excluding deferred tax assets/liabilities, excess cash, surplus assets and/or deposit balances.

Cash balance items often attract a one-for-one purchase price adjustment.

Working capital management

Decisions relating to working capital and short term financing are referred to as working capital management. These involve managing the relationship between a firm's short-term assets and its short-term liabilities. The goal of working capital management is to ensure that the firm is able to continue its operations and that it has sufficient cash flow to satisfy both maturing short-term debt and upcoming operational expenses.

Decision criteria

By definition, working capital management entails short term decisions - generally, relating to the next one year period - which are "reversible". These decisions are therefore not taken on the same basis as Capital Investment Decisions (NPV or related, as above) rather they will be based on cash flows and / or profitability.

  • One measure of cash flow is provided by the cash conversion cycle - the net number of days from the outlay of cash for raw material to receiving payment from the customer. As a management tool, this metric makes explicit the inter-relatedness of decisions relating to inventories, accounts receivable and payable, and cash. Because this number effectively corresponds to the time that the firm's cash is tied up in operations and unavailable for other activities, management generally aims at a low net count.

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News about Working Capital

Podium Capital Corporation Announces Filing of Filing Statement and Private Placement

MarketwireTORONTO, ONTARIO--(Marketwire - May 8, 2009) - Podium Capital Corporation (TSX VENTURE:POD.P) ("Podium") and 3542114 Canada Inc., carrying on business as "CRS Electronics" ("CRS"), are pleased to announce the filing on SEDAR of the filing statement (the "Filing Statement") in respect of the previously announced share exchange transaction between Podium and the shareholders of CRS (the "CRS ...http://www.marketwire.com/mw/release.do?id=987084&sourceType...

Sharia-compliant venture capital fund for real estate

Express IndiaSecure Investment Management India Pvt Ltd on Friday launched the country's first fully Sharia-compliant and Sebi-registered venture capital fund, Secure India Real Estate Fund, here.http://www.financialexpress.com/news/Shariacompliant-venture...

Podium Capital Corporation Announces Filing of Filing Statement and Private Placement

CCNMatthews via Yahoo! FinanceTORONTO, ONTARIO-- - Podium Capital Corporation and 3542114 Canada Inc., carrying on business as "CRS Electronics" , are pleased to announce the filing on SEDAR of the filing statement in respect of the previously announced share exchange transaction between Podium and the shareholders of CRS , which transaction is expected to constitute Podium's Qualifying Transaction as defined in and pursuant ....http://biz.yahoo.com/ccn/090508/200905080529444001.html?.v=1

Podium Capital Corporation Announces Filing of Filing Statement and Private Placement

Marketwire via Yahoo! FinancePodium Capital Corporation and 3542114 Canada Inc., carrying on business as "CRS Electronics", are pleased to announce the filing on SEDAR of the filing statement in respect of the previously announced share exchange transaction between Podium and the shareholders of CRS, which transaction is expected to constitute Podium's Qualifying Transaction as defined in and pursuant to the policies of the ....http://biz.yahoo.com/iw/090508/0499617.html

London reactivates Working Committee

Tobago NewsChief Secretary Orville London has announced the reactivation of the Working Committee charged with the responsibility of reviewing the THA ACT #40 of 1996, and the Constitution of Trinidad and Tobago with special reference to Tobago's position on Constitutional Reform' at the Third Plenary Sitting.http://www.thetobagonews.com/index.pl/article?id=22205142

News about Working Capital

Coke bottler hit as Russians turn to water

Financial TimesMr Constantinou said: “Focus on cost savings programmes, disciplined use of capital and tight working capital management have resulted in significantly improved free cash flow generation in the first quarter.” Cost cuts of €115m-€120m would ... http://www.ft.com/cms/s/0/043d78a2-3b38-11de-ba91-00144feabd...

Monterey's SK Foods files for bankruptcy protection

Thecalifornian.comIn an e-mail to employees shortly before his Monday resignation, Salyer president Eric Schwartz said the company lost its working capital and credit line within a three-week period after a profitable first quarter. Lisa Crist, vice president for ... http://thecalifornian.com/article/20090509/NEWS01/905090304/...

Sod turning for cop shop in June

Abbotsford NewsThe mayor says tenders have been opened and staff are now working through all the documents, consulting with RCMP on the ... Morning Star • May-02-2009 Former fire chief gravely ill at KGH Kelowna Capital News ... http://www.bclocalnews.com/okanagan_similkameen/kelownacapit...

Building Your Own Business

ForbesOften the biggest financial challenge new entrepreneurs face is coming up with enough working capital to stay in business for 90 days or so until revenues start coming in the door, says Alice Magos, a small-business analyst at Chicago's CCH. "Most ... http://www.forbes.com/2009/04/30/moneybuilder-start-business...

Schultz watching Ducks like a hawk

Abbotsford NewsWhile he watches the playoffs, Schultz is working out in preparation for his rookie NCAA season where he will be a fresh face ... Morning Star • May-02-2009 Former fire chief gravely ill at KGH Kelowna Capital News ... http://www.bclocalnews.com/okanagan_similkameen/kelownacapit...

Search results for Working Capital

Express Working Capital

Operating a business in today's financial climate isn't easy. You need working capital to attract new customers, improve customer service and grow your bottom line.http://expressworkingcapital.com

Working Capital

Working Capital - What is working capital? What purposes can working capital loans be used for? What are the different types of capital loans?http://www.businessfinance.com/working-capital.htm

working capital: Definition from Answers.com

working capital n. The assets of a business that can be applied to its operation. The amount of current assets that exceeds currenthttp://www.answers.com/topic/working-capital

Factoring & Working Capital Financing - Far West Capital

We provide working capital for growing companies through a variety of accounts receivable and inventory financing tools.http://www.farwestcap.com/

Working capital financial definition of Working capital. Working ...

Working capital. Defined as the difference between current assets and current liabilities. There are some variations in how working capital is calculated.http://financial-dictionary.thefreedictionary.com/Working+Ca...
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Answers for Working Capital

DaniWorking capital?DaniWorking Capital is the main resource of a trading or manufacturing business. Actually working capital is the sole earner part in a business financially. Other parts of earning such as interest on secu...jsphlambaHow is the working capital of a business computed?jsphlambaAside from fixtures, fixed expenses and descretionary expenditures, the next important consideration is inventory. With planned sales as a starting point, one must determine these things. Beginnin...MR. XHow to calculate change in working capital for 1st year company?MR. XYou can calculate the first year working capital by using some balance sheet numbers. Net WC = current assets - current liabilities, so if you are looking at it in a finance perspective for a DCF, N...KHow to calculate Working Capital Requirement from historical data?KCalculate the working capital for the historical periods - then that will tell you the average and peak working capital requirements for the businessMattHow does a person get more working capital?MattCapital can come from individuals or firms specializing in venture capital funding. In either case you will be required to demonstrate that your business can become profitable (return on investment) ...
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