Working capital management, Summary FBS210

Precious Notico



Working capital


Inventory days
(Depends on info given: Raw Materials/WIP/finished goods)




Debtors’ and creditors’ days



Financing policy
Conservative Moderate Aggressive
Net working capital High current assets, Moderate current Low current assets,
low current liabilities: assets, moderate high current liabilities:
high net working current liabilities: low net working
capital moderate net capital
working capital
ROI and risk High ROI, high risk Moderate ROI, Low ROI, low risk
moderate risk
Current ratio high Moderate Low
Extra tips for Current liabilities are Current liabilities Current liabilities
determining policy if not enough to cover cover current assets, cover current assets,
the above are unclear current assets so we no excess excess is used to
have to use long term finance non-current
borrowings to cover assets
excess