Working Capital
You receive a letter from your utility company asking you to save time and money by giving them authorization to deduct your average monthly bill directly from your checking account. No checks to write, no stamps to find, and you will always know what amount will be deducted and the date of the deduction. Once a year, you will be billed or credited for the difference between your yearly average and what you actually used in gas and electricity. What could be easier? Why is the utility company being so nice? Do they really care about your time and budget? The answer is yes - and no. They are making an offer that will appeal to and benefit many consumers. But more important, from the utility's standpoint, is that this offer will also be a tremendous help to the company in an area that is important to every firm - cash management.
This week, we are going to look at the ways in which a company manages its working capital. Working capital consists of the firm's current assets of which......
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