Guy Albert de Chimay | Guy Albert de Chimay |Guy Albert de Chimay

Guy Albert de Chimay Expert tips provider.  How do firms choose their operating cycle? How do firms choose their cash conversion cycle? What is the impact of firm's operating cycle on the size and periodicity of investments in receivables and inventories? How do seasonal and cyclical trends affect firm's operating cycle, cash conversion cycle and investments in current assets? These strategic policy questions relate to optimal cash flows synchronization and effective working capital management designed to maximize the wealth producing capacity of the enterprise. In this review, we will examine some pertinent and extant academic literature on effective working capital management and provide some operational guidance to small business enterprises. The shorter the cash conversion cycle, the smaller the size of the firm's investment in inventories and receivables and consequently the less the firm's financing needs. Although setting ending cash balances is, to a large

INTRODUCTION Guy Albert de Chimay Top service provider.   For increasing shareholder's wealth a firm has to analyze the effect of fixed assets and current assets on its return and risk. Working Capital Management is related with the Management of current assets. The Management of current assets is different from fixed assets on the basis of the following points: 1. Current assets are for short period while fixed assets are for more than one Year. >2. The large holdings of current assets, especially cash, strengthens Liquidity position but also reduces overall profitability, and to maintain an optimum level of liquidity and profitability, risk return trade off is involved holding Current assets. 3. Only Current Assets can be adjusted with sales fluctuating in the short run. Thus, the firm has greater degree of flexibility in managing current Assets. The management of Current Assets helps affirm in building a good market reputation regarding its business and econ