What is the primary focus of working capital management?
Practice Questions
1 question
Q1
What is the primary focus of working capital management?
Maximizing shareholder wealth
Minimizing operational costs
Ensuring liquidity and operational efficiency
Maximizing asset turnover
The primary focus of working capital management is ensuring liquidity and operational efficiency.
Questions & Step-by-step Solutions
1 item
Q
Q: What is the primary focus of working capital management?
Solution: The primary focus of working capital management is ensuring liquidity and operational efficiency.
Steps: 4
Step 1: Understand what working capital is. Working capital is the money a company uses for its day-to-day operations.
Step 2: Recognize that liquidity means having enough cash or assets that can quickly be turned into cash to meet short-term obligations.
Step 3: Realize that operational efficiency refers to how well a company uses its resources to produce goods or services.
Step 4: Conclude that the primary focus of working capital management is to make sure the company has enough cash (liquidity) while using its resources effectively (operational efficiency).
