Working Capital Management

We know that working capital is current assets minus current liabilities, often times a company can have too much or too little working capital. In the discussion talk about why a business may not want to hold too much or too little working capital. The general rule is that working capital is between 1 and 2 and not too much above or below that.

• Examine the key reasons why a business may not want to hold too much or too little working capital. Provide examples that illustrate the consequences of either situation.
• Explain alternative ways a business can use free cash flow. Provide examples.

Be sure to respond to at least one of your classmates' posts.

• Read a post by one of your peers and provide a substantive response, making sure to extend the conversation by asking questions, offering rich ideas, or sharing personal connections.