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Working Capital Management Strategies and Cash Flow Planning

· You are the CFO at a manufacturing company. Your company is anticipating an impending cash crunch. What short-term working capital strategies might you employ? Why? In what order would you implement them? Why?

· What part of working capital management does a company have the most control over? Why? What does a company have the least control over? Why?

· What is the most important part of cash flow planning? Which variable must be determined accurately? Is it healthy to have a cash balance at the end of each month? Why or why not?

· What are the main inputs needed to begin the financial portion of a strategic plan? Who is responsible for providing those inputs? Why are these inputs so important? How would you use these inputs to create the plan?

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The Short-Term Working Capital Strategies:

All organizations need sufficient cash so that they can be able finance the operations of the company. The experience of a cash crunch in the corporation shows that it is running low on its cash which might affect the activities of the organization. To counter this cash crunch, an effective short-term working capital strategy has to be utilized. This will show the amount of current company assets that exceed the current liabilities. Financial executives are known to have issues with the working capital management variable in the organization. Through the working capital the organization can be able to realize their financial position in the obligations that they have to meet the financial requirements with the use of the current assets (Working Capital, 2006).

One of the short-term working capital strategies that can be utilized by the CFO in the company would be accounts receivable selling. Through this strategy, the corporation will be able to meet their needs through the act of selling the accounts receivable. The other short-term working capital strategies are inclusive of: Equity issuance, credit with suppliers, debt issuance and hybrid financing. The implementation of the strategies will be carried out in accordance to the stated order. This will give the company the opportunity of ensuring that strategy that is employed will be beneficial to the operations of the company as well as meet the needs to the esteemed clients in the target market (Business ...

Solution Summary

The solution discusses working capital management strategies.