THEORIES AND APPROACHES – WCM

Reference: Agency Management System, Insurance CRM & SFA Software 

 

Introduction to Working Capital Management-:
Working capital is said to be the life blood of a business same way as agency management system. Working capital signifies funds required for day-to-day operations of the firm. Firm useing CRM Software and SFA software also required to work out working campital requirement.  In financial literature, there exist two concepts of working capital, namely gross concept and net concept.According to gross concept, working capital refers to current assets viz, cash, marketable securities, inventories of raw material, work –in-process, finished goods and receivables. According to net concept, working capital refers to the difference between current assets and current liabilities.

Ordinarily, working capital can be classified into fixed or permanent and variable or fluctuating parts. The minimum level of investment in current assets regularly employed in business is called fixed or permanent working capital and the extra working capital needed to support the changing business activities is called variable or fluctuating working capital.

What is the nature and the scope of working capital decisions? What are the im portent dimensions of working capital management? What are the basic decision criteria, principles and approaches applicable in the field of working capital management? We shall take up each these questions in our next post.