Working capital management

Working capital is the life blood and nerve center of any business. No business can run successfully without adequate working capital. Hence working capital management is very important of corporate finance because it directly affects the liquidity and profitability of the firm. An efficient working capital management (WCM) has a significant effect towards the creation of firm’s value. It is a fact that financial managers in the firm used to give concentration on managing long term financial decisions, specially Capital structure and Investment Decisions, company valuation and Dividend decisions. Only little attention was given for managing the short term assets and liabilities, managers began to realize the importance of investigating those short term assets and liabilities since the working capital management has an important role for the firm’s profitability and risk and overall value of the firm.