Working Capital Management: Current Asset Holdings and Financial Policies

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Current Asset Holdings and Financing Policies Introduction Working capital management is a strategized tool of corporate finance for making financial decisions that make and analyze a business enterprise. This finance management method in a corporate organization involves the comprehension of the totals while conducting working capital plus how it is financed. There are several concepts that assist in the comprehension of proper working capital management. These concepts are current asset holdings and financing policies, cash conversion cycle, cash budget and cash management techniques. This context, however, probes on how current asset holdings and financing policies are used in improving the value of a company through the combination of an organization's one-time and fiscal free cash flows (FCF). It is necessitated that a firm takes in superior working capital management to incalculably cut down the required investments in functionality in order to provide larger FCFs and a higher firm value (Brigham and Daves, 2009, pg 727). Current Asset Holdings A firm usually has its own permanent and temporary current assets holdings. The former are assets that are obligated to be carried out at the trough of asset cycles while the latter are assets that fluctuate depending on the season or cyclic variances in sales (Brigham and Houston, 2012, pg 518). They go hand in hand with their respective financing policies. Current assets financing policies depicts the mannerism in

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