Dealer Satisfaction

WORKING CAPITAL MANAGEMENT Introduction A firm is required to swan a balance surrounded by runniness and profitability while conducting its day to day operations. Liquidity is a effrontery to ensure that firms atomic number 18 able to meet its short-term obligations and its continued liquefy can be guaranteed from a profitable venture. The importance of cash as an indicator of continuing monetary health should not be impress in view of its crucial role within the furrow.This requires that subscriber line must(prenominal) be run both efficiently and profitably. In the process, an asset-liability mismatch whitethorn occur which may increase firms profitability in the short run but at a risk of its insolvency. On the other hand, too much focus on liquidity ordain be at the expense of profitability and it is common to find finance textbooks begin their working capital sections with a discussion of the risk and buffet tradeoffs inherent in alternative working capital polici es.Thus, the manager of a business entity is in a dilemma of achieving desired tradeoff between liquidity and profitability in put up to maximize the value of a firm. Importance of Working crownwork The working capital meets the short-term financial requirements of a business enterprise. It is a trading capital, not retained in the business in a particular form for longer than a year. The money invested in it changes form and substance during the normal course of business operations.The need for maintaining an adequate working capital can hardly be questioned. Just as circulation of blood is very necessary in the gentlemans gentleman body to maintain life, the flow of funds is very necessary to maintain business. If it becomes weak, the business can hardly prosper and survive. Working capital starvation is generally credited as a major cause if not the major cause of down in the mouth business failure in some(prenominal) developed and developing countries. Objectives of Working CapitalIt is becoming more and more hard to use debt to finance mechanical engineering firms. Companies in this industry argon therefore forced to optimize their capital employed in order to become less dependent on borrowed money. Management of Working Capital While the performance levels of small businesses have traditionally been attributed to general managerial factors such as manufacturing, marketing and operations, working capital management may have a consequent impact on small business survival and growth.The management of working capital is important to the financial health of businesses of all sizes. The amounts invested in working capital are often in high spirits in proportion to the total assets employed and so it is vital that these amounts are used in an efficient and effective way. However, there is evidence that small businesses are not very good at managing their working capital. accustomed that many small businesses suffer from under capitalisation, the import ance of exerting tight delay over working capital investment is difficult to overstate