working capital managment
As a manager, you may share on-going responsibility to ensure a business has cash adequate for its operating needs. Accordingly, in this topic, you will examine policies and methods for managing a business’ working capital. You will also learn how to prepare a short-term cash flow forecast of a business, which estimates the amount of any additional funds the business needs to meet its short-term liquidity requirements. Businesses typically use these forecasts to support their requests for loans or other financing from banks and other financial services firms.
In preparing financial projections and forecasts of their business, managers must rely on incomplete information and make a variety of assumptions and estimates about the uncertain outcome of future events, such as the:
- Growth and volatility of future sales.
- Speed at which the business will collect trade receivables from customers.
- Minimum amount of inventory to keep on hand to timely fill customer orders.
Consequently, financial projections and forecasts are highly susceptible to errors or purposeful manipulation. In Topic 4, you examined earnings management and related incentives to engage in this practice. Much of that material is relevant to your consideration of financial projections and forecasts, as well.
By completing this assignment, you will learn how to prepare a short-term cash flow forecast of a business, which estimates any additional funds the business needs to meet its short-term liquidity requirements. As a manager, you may share on-going responsibility to ensure a business has cash adequate for its operating needs. Businesses typically use these forecasts to support their requests for loans or other financing from banks and other financial services firms.
Please use the file entitled Topic7Template for this assignment.
