WORKING CAPITAL MANAGEMENT A CRITICAL ANALYSIS OF TECHNIQUES AND PRACTICES

Abstract

Working capital is crucial for assessing a company's short-term financial health and operational efficiency. It is critical financial metric that represents the difference between a company's current assets and current liabilities. It measures a firm's operational liquidity and short-term financial health, indicating its ability to cover its short-term obligations and invest in its operations. Effective management of working capital involves optimizing the balance between assets and liabilities to ensure sufficient liquidity while minimizing costs associated with holding excessive inventory or delaying payables. This abstract explores the components of working capital, including accounts receivable, inventory, and accounts payable, and discusses its impact on overall business performance and financial stability. It also highlights strategies for managing working capital, such as improving cash flow management, streamlining inventory processes, and negotiating favorable credit terms. Understanding and managing working capital is essential for sustaining business operations, supporting growth, and achieving long-term financialsuccess.