Working Capital Management
Strategies optimizing current assets/liabilities for operational efficiency.
Formula
Working Capital = Current Assets − Current Liabilities
Real World
Amazon uses sophisticated working capital management to hold minimal stock while negotiating extended payment terms with suppliers, meaning it often collects customer cash before paying suppliers — effectively funding operations for free.
Exam Focus
For 'evaluate' questions, weigh trade-offs between liquidity and profitability; don't just list strategies.
How well did you know this?