Assignment 2 Working Capital


3)Working Capital
: Working Capital is considering what the best way would be in terms of a management for short-term resources and obligations. The concept of this decision focuses on if it is possible to maintain enough capital for payments of its bills including and extra money earned as interest. Current assets and current liabilities are considered as the part of this decision.

Working capital is the key to a successful business. It is like their blood flow and the manager’s job is to help keep it flowing. Under the Generally Accepted Accounting Principles working capital is simply the difference between a company’s Current Assets, which are cash, inventory, accounts receivable and prepaid items, and Current Liabilities, accounts payable and accrued expenses.

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,127,654 $1,169,810

Analyze the fundamental differences between the working capital structures and components for each chosen company, and speculate upon the main reasons why such differences exist.

Working capital is the money that a company has after paying off its current liabilities and with which it can finance its operating and working capital requirements. The higher a number the better a company is able to pay off its debt and have cash for meeting its financial obligations. The current ratio is used to gauge a company's ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point. The current ratio denotes the efficiency of a company's operating cycle or its ability to turn its products into cash, which is a key requirement for business success. Quick ratio is an indicator of a company's short-term liquidity. The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets, essentially cash and cash equivalents. The higher the quick ratio, the better the financial position of the company in terms of its ability to meet its liabilities.

Working capital can be defined as the way we measure how much liquidity a business has. It can be calculated by deducting the current liabilities from their current assets. It's of vital importance for large and small businesses to have cash accessible as this will reflect their credit worthiness and their capacity to meet their liabilities. However, this is not the only or most accurate measurement of their ability to pay their debt (Boundless Open textbook, n.d.).

Additionally, implementations in working capital programmes are effective especially in GSK’s operations due to stable and shorter conversion days than of AZN. However, there are limitations included in interpreting its ratios: one might be that averages have not been used and another; that both companies have implemented its capital management at different periods of time; therefore, the costs of manufacturing, preparation in launches of new pipeline products and further implementations in manufacturing as well as restructuring its working capital has had its impacts in increasing cost of sales for certain periods; hence distorting its figures. This may result in uncertainty of how well a company operates over time as stability does not

After reviewing the Working Capital Simulation, I have summarized the various phases, examined why SNC made several decisions and how their decisions were based on the existing working capital. The selections were key determinants that affected SNC 's working capital and had effects that are associated with limited access to financing (Harvard Business Publishing, 2014)..

Total Fixed Variable Total Average Marginal Quantity Cost Cost Cost Cost Cost Price Profit MR 0 40 0 40 x x 72 1 40 55 95 95 55 72 -23 -23 2 40 75 115 57.5 20 72 29 52 3 40 90 130 43.33 15 72 86 57 4 40 110 150 37.5 20 72 138 52 5 40 135 175 35 25 72 185 47 6 40 170 210 35 35 72 222 37 7 40 220 260 37.14 50 72 244 22 8 40 290 330 41.25 70 72 246 2

Working or functioning capital is the extent at which the organization’s cotemporary possessions enhanced from the liabilities. In this scenario group A evaluate the financial statement of Wal-Mart that includes balance sheets, cash flow statements, and suggestion by the managerial administration along with the postscripts to the financial statements of account that needs to demonstrate how every existing resource as well as liability has influenced the tactics that are concerned with the cash management administration. Moreover perceiving the upcoming year’s prediction of Wal-Mart’s profitability or income would boost up by 20%, we then give a diversified suggestion concerning working

Many businesses need to have working capital. Working capital is calculated by subtracting current liabilities from

One of the challenges face corporate managers in the world is how capital structure influences the working capital and growth opportunity of their companies. One of the common questions asked by these managers and other decision makers is “does capital structure really influence the working capital (liquidity) and growth opportunity of companies?” and if does influence, on what way? Addressing this problem will be advantageous for all corporate managers and other decision makers in the field of finance. This study

This report is an evaluation provided to a finance director of a UK public limited manufacturing company, whose subsidiaries are around the world. The company’s stock is trading on the London Stock Exchange. The report is going to provide some information about working capital management (WCM).

Since the profit marge is 25.7%, Google is able to collect a reasonable profit each year from their endeavors. The minimum acceptable value of a current ratio is 1.0 with a value of 2.0 or better being preferred. Therefore, Google’s current ratio of 5.919 far exceeds the minimum and indicates an ability to pay current liabilities and weather short-term economic crises. The working capital is an additional measure of the business’s ability to pay off short-term debts; with $43.845 million available to their use, Google appears to be well prepared.

I chose to research working capital because I did not know the term nor the significant role it plays in operating a business. I learned that working capital is the requirements for running normal business operations on a daily basis. It is the necessary amount needed to keep the doors open and is analyzed for a period of about a year. Working capital is essential for fulfilling business operating needs. Cash that is spent is not considered working capital because it can no longer be used by the company to invest. Working capital is the cash surplus within the company used to make more money. Implementing an effective working