Managing Working Capital and Cash Flow

  1. 10.3 Explain how to manage working capital and cash flow.

Working capital refers to the current assets of a company. Net working capital is the difference between current assets and current liabilities. As part of working capital management, firms manage all current accounts, such as cash, accounts receivable, inventory, and accounts payable. Cash comes from various sources, especially sales of goods and services. In the MNE, an important task of working capital management is ensuring that cash is available where and when needed. Cash-flow needs arise from everyday company activities, such as paying for labor and materials or paying taxes and interest on debt. To optimize global operations, international ...

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