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Working Capital As A Financial Metric

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Working capital is a financial metric that represents the operational liquidity of a business (Working Capital Management Analysis, 2015). Along with fixed assets (property, plant, and equipment etc.) working capital is considered a part of operating capital. The more positive a company’s working capital is, the more they are required to certify that they are able to continue its processes and has sufficient funds to cover both, growing short-term debt and upcoming expenses. It is stated by Watson and Head (2013) that decisions relating to working capital and short term financing are referred to as working capital management, which involve managing the relationship between a firm 's short-term assets and its short-term liabilities. Morrison’s (Wm Morrison Supermarkets plc) was founded in 1899 and with a market share of 11% and listed on the London stock exchange - they have now become the fourth largest supermarket chain in the United Kingdom (Morrisons-corporate.com, 2015). Throughout this report, it is going to show Morrison’s calculated capital management to date, involving an evaluation of ratios and competitor ratios too.
1.1 – KEY WORKING CAPITAL RATIOS
Ratio analysis will lead management to identify areas of focus such as inventory management, cash management, accounts receivable and payable management (Atrill, 2012). Using capital ratios can be quite beneficial because it allows finance managers to see if they are overspending on assets or liabilities, what
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