What is the objective of working capital management?


Quick Answer

The objective of working capital management is to make sure that a firm can keep operating and to ensure that it has enough money to take care of short-term debt and upcoming expenses. This means that the company must maintain the right ratio of assets, liabilities and working capital.

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Full Answer

Working capital management is a type of accounting technique where a company or firm focuses on short-term finances. Many companies can improve their revenue, by having a strong working capital management system. A company's working capital management directly affects its profitability, which means the working capital management system is a good indicator of the company's market value.

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