Working capital (including receivables, inventory and payables) management is a vital element in the planni of...
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Working capital (including receivables, inventory and payables) management is a vital element in the planni of a business's finances, affecting the liquidity of a business. Having working capital enables the production and sales function to operate but it also represents net assets tied up, which costs the company money. The aim when considering the amount of working capital that a business should have is to balance the need for working capital against the cost. Required: (i) (ii) (iii) Discuss the two (2) key considerations with working capital that have to be balanced to ensure the (6 marks) maximum benefit for the business. Identify and explain the factors that would determine the level of working capital investment. (12 marks Briefly describe the two main measures of working capital management. (2 marks [Total = 20 marks Working capital (including receivables, inventory and payables) management is a vital element in the planni of a business's finances, affecting the liquidity of a business. Having working capital enables the production and sales function to operate but it also represents net assets tied up, which costs the company money. The aim when considering the amount of working capital that a business should have is to balance the need for working capital against the cost. Required: (i) (ii) (iii) Discuss the two (2) key considerations with working capital that have to be balanced to ensure the (6 marks) maximum benefit for the business. Identify and explain the factors that would determine the level of working capital investment. (12 marks Briefly describe the two main measures of working capital management. (2 marks [Total = 20 marks
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