Working capital is very important for all departments in a company.
frequently responsible for payable and receivable; operations is in charge of inventory; and.
finance handles cash management. Marketing also plays a key role because sales forecasts.
are a key determinant of working capital needs" (Jordan,2001,p.477). Working capital.
basically deals with a firm's short-term assets and liabilities. "It refers to the amount of.
capital which is readily available to an organization. That is, working capital is the.
difference between resources in cash or readily convertible into cash (current assets) and.
organizational commitments for which cash will soon be required (current liabilities)".
(Treasury, 2002). If a company operates with more working capital than necessary, there.
are problems within operations. The objective is to maintain a balance within the entities of.
working capital management. The overstatement of working capital could be used for.
investment purposes instead of accumulating in bank deposits. The balancing of working.
capital management occurs with the understanding of float management, inventory.
management, and cash management.
Float is basically the difference in a company's book balance and available balance. .
It represents that time period of clearing a check. The balance on the check register (book.
balance) is automatically deducted when a check is written, while the financial institution.
(available balance) remains constant until the check has cleared the account. "properly.
managing float can significantly impact a bank's funding requirements and over.
profitability" (Glassman, 2002). Disbursement and collection float are the two types of.
floats. Disbursement float occurs as checks are written by a company, causing a decrease in.
the book balance and no change in the available balance. On the other hand, checks.
received by a company generates collection float. Since checks are received, book balances.
