Working capital management requires monitoring a company's assets and liabilities to maintain sufficient cash flow to meet its short-term operating costs and short-term debt obligations. ... Working capital management can improve a company's cash flow management and earnings quality through efficient use of its resources.

What is an example of working capital management?

Working capital refers to the amount which the company requires with the purpose of financing the day to day operation and example of which includes the working capital of $100,000 with a manufacturer which is calculated by subtracting current liabilities of $200,000 from the current assets of $300,000.

What is meant by working capital?

Working Capital is obtained by subtracting the current liabilities from the current assets. ... Working Capital indicates the liquidity levels of companies for managing day-to-day expenses and covers inventory, cash, accounts payable, accounts receivable and short-term debt that is due.