Working Capital Management

Working Capital Management

by James Sagner
Released August 2014
Publisher(s): Wiley
ISBN: 9781118933831

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Book description

Stay liquid, think global, and better manage resources with this authoritative guide

Working Capital Management is a comprehensive primer on keeping your business financially competitive in the face of limited access to short-term funds. With detailed insight applicable to each phase in the business cycle, this authoritative guide helps managers revamp current practices for more efficient use of assets and liabilities, including more stringent monitoring and planning of collections, disbursements, and balances. Readers will learn how to minimize investments in idle resources, and how to maximize the use of forecast data to better identify risk and the optimal use of available funds. Case studies illustrate the practical applications of the ideas presented, with particular attention given to cash budgeting, forecasting, banking relationships and other common scenarios with specific requirements.

Managing a company’s short-term resources is both an art and a science. Effectively maintaining funds for ongoing activities – and keeping those funds liquid, mobile, and available – is a masterful skillset lacking in business. Working Capital Management offers practical advice for managers in this challenging position, providing guidance that helps them:

  • Learn the specific metrics at work in capital management, and the problems that they can cause
  • Improve cash management with robust fraud protection and better use of short-term instruments
  • Manage the issues that arise from accounts receivable, inventory, payables, information management, and international sources
  • Develop an effective management system for key points in the working capital cycle
The recent liquidity crisis in the U.S. has thrown the spotlight onto those companies that have adjusted well to credit contraction and the weakened economy, and these success stories – some of which are noted in the book – demonstrate that a positive business outcome can be accomplished. Working Capital Management provides a clear look at a complex issue, with practical, actionable, sustainable advice.

Table of contents

  1. Preface
    1. Concept of the Book
  2. Acknowledgments
  3. Chapter 1: Concepts in Working Capital Management
    1. Working Capital Concepts
    2. Improving Working Capital Management
    3. The Significance of Working Capital
    4. Cost as the Working Capital Issue
    5. Applying These Ideas to a Real Business: Best Buy
    6. Summary
    7. Notes
  4. Chapter 2: Working Capital Ratios and Other Metrics
    1. Ratio Analysis
    2. Other Ratios and Their Application
    3. Other Metrics
    4. Benchmarking
    5. General Problems in the Use of Ratios and Metrics
    6. Summary
    7. Notes
  5. Chapter 3: Cash—Management and Fraud Prevention
    1. Forms of Cash
    2. Paper Transactions: Lockboxing
    3. Paper Transactions: Depository Accounts
    4. Paper Transactions: Controlled Disbursement
    5. Electronic Transactions
    6. Float and Cost Issues
    7. Summary
    8. Notes
  6. Chapter 4: Cash—Credit and Short-Term Financial Instruments
    1. Developing a Short-term Forecast
    2. Cash Budgeting
    3. Credit Financing
    4. Short-term Investments
    5. Summary
    6. Notes
  7. Chapter 5: Managing Bank Relationships
    1. The Changing Financial Landscape
    2. Bank Relationship Management
    3. Cash Mobilization in a Multibank Network
    4. General Terms of Credit Facilities
    5. Specific Terms in Credit Facilities
    6. Ongoing Bank Relationship Concerns
    7. Summary
    8. Notes
  8. Appendix to Chapter 5: Selecting Noncredit Banking Services
    1. The Request for Proposal
    2. RFP Evaluation
  9. Chapter 6: Accounts Receivable and Working Capital Issues
    1. Elements of Receivables Management
    2. Float Opportunities in Managing Receivables
    3. Receivables Cycle Monitoring: Ratios
    4. Receivables Cycle Monitoring: The Aging Schedule
    5. Sales Financing
    6. Credit Reporting
    7. Terms of Sale
    8. Invoice Generation
    9. Asset-Based Financing
    10. Debt Collection Agencies
    11. Summary
    12. Notes
  10. Chapter 7: Inventory and Working Capital Issues
    1. Elements of Inventory Management
    2. Inventory Cycle Monitoring: Ratios
    3. Inventory Cycle Monitoring: Metrics
    4. The Purchasing Function
    5. Analyzing Purchasing Activities
    6. EOQ and JIT
    7. Work-in-Process
    8. ABF: Inventory Financing
    9. Summary
    10. Notes
  11. Chapter 8: Payables and Working Capital Issues
    1. Elements of Payables Management
    2. Payables Cycle Monitoring: Ratios
    3. The Accounts Payable Function
    4. Payables Using Internal Processes
    5. Payables Outsourcing
    6. Check Payments in a Comprehensive Payables Environment
    7. Payroll Disbursements
    8. Summary
    9. Notes
  12. Chapter 9: International Working Capital
    1. Capitalism Goes Global
    2. The Financing of International Transactions
    3. The Foreign Exchange Markets
    4. Country Risk Analysis
    5. Other Significant Issues in International Working Capital
    6. Cultural and Corporate Practices Affecting Working Capital
    7. Summary
    8. Notes
  13. Chapter 10: Information and Working Capital
    1. Information Technology
    2. Bank Information Technology
    3. Internet Bank Technology
    4. ERP: An Alternative Approach
    5. Choosing Working Capital Information Systems
    6. Summary
    7. Notes
  14. Chapter 11: Managing the Working Capital Cycle
    1. Risk and Working Capital
    2. Traditional Risk Management
    3. Enterprise Risk Management
    4. The ERM Process
    5. Efficiency and Working Capital
    6. Working Capital and Liquidity
    7. Suggested Actions
    8. Developments in Working Capital Management
    9. The Gizmo Deal: How Delays Turn Profits into Losses
    10. Summary
    11. Notes
  15. Chapter 12: Introduction to Working Capital Cases
    1. Sequence of the Cases
    2. The Concept of the Working Capital Case
    3. Case: Widget Manufacturing
    4. Suggested Solutions
    5. Note
  16. Cases on Working Capital Management
    1. Case 1: Dinner Bell Hotel
      1. Cash Flow Issues
      2. Alternative Actions
      3. The “Raw” Data
      4. Questions
    2. Case 2: Koala Fun
      1. The Partners' First Success
      2. Financial Concerns
      3. Borrowing Issues
      4. Working Capital
      5. Final Thoughts
      6. Questions
    3. Case 3: Miller Building Supplies
      1. Joseph Miller Starts MBS
      2. Variations in Working Capital Requirements
      3. A Banker's Assistance
      4. Questions
    4. Case 4: Office Smart
      1. The Business of Office Smart
      2. Financial Issues
      3. Questions
    5. Case 5: Quacker Cracker
      1. The Attitude toward Debt
      2. Financial Planning
      3. Questions
    6. Case 6: Young Brands
      1. Changes in YB's Global Marketing Strategy
      2. Forecasting Considerations
      3. Working Capital Issues
      4. Financial Issues
      5. Questions
  17. Appendix I: Basic Financial Concepts
    1. General Balance Sheet Issues
    2. Assets and Liabilities
    3. Net Worth
    4. Cost of Capital
  18. Appendix II: Websites of Working Capital Organizations*
  19. Glossary
    1. U.S. Legislation Significant to Working Capital Management
  20. About the Author
  21. Index
  22. End User License Agreement

Product information

  • Title: Working Capital Management
  • Author(s): James Sagner
  • Release date: August 2014
  • Publisher(s): Wiley
  • ISBN: 9781118933831