IGNOU MS 41 2018 - ‘The Working Captal Module is divided into three additional part

Question

‘The Working Captal Module is divided into three additional parts beyond the investment information presented in the Capital Investment (CI) module’. Discuss of objectives and operation sequential operation of the working capital module. Discuss the objectives and operation of each these three parts.

22 Apr 2018

Answer :

Word Count : 441

The primary objective of working capital management is to ensure smooth operating cycle of the business. Secondary objectives are to optimize the level of working capital and minimize the cost of such funds.

The superior objective of financial management is wealth maximization and that can be gained by profit maximization accompanied with sustainable growth and development. For sustainable growth and development, the objectives of all the stakeholders including customers, suppliers, employees, etc should be aligned to the growth of the organization.

Objectives of Working Capital Management

Smooth Working Capital Operating Cycle

This implies that the operating cycle i.e. the cycle starting from the acquisition of raw material to its conversion to cash should be smooth. It is not easy; it is as good as circulating 5 balls with two hands without dropping a single one. If following 6 points can be

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