Capital Management (Coursework Sample)

Student’s Name
Professor’s Name
Course
Date of Submission
Working Capital Management
Question 1
Working capita management is essential to every other company in all industries. A good working capital strategy provides the business with enough cash flow to enable it meets its debts. The debts referred to are short run and include employee’s wages. Working capital management also makes sure that a company provides the cash flow to meet the operational expenses of the company. The company is able to sustain its day to day activities. Proper working capital management places the company in a position to get loans from financial institutions and at friendly interest rates.
It enables the management of the company apply to good and profitable use its resources and assets. A proper working capital management strategy will indicate to the company the right period to shift into the cash conversion period. It also places the concerned company in a position where it can react timely and efficiently to competition and changes in the industry. Industries such as aviation, real estate, power and jewelry require more working capital management than other sectors. These industries are highly capital intensive and have long working capital cycles. They, therefore, require more working capital management to maintain their high working capital requirements.
Question 2
Cash conversion cycle is the amount of time an enterprise takes to convert financial resources into cash. The amount of time in question is measured in days. It is also known as the cash cycle. The cycle is composed of three main components. The three elements are days inventory outstanding, day sales outstanding and days payable outstanding.
Day inventory outstanding is...