Managing Working Capital Essay Example | Topics and Well Written Essays - 750 words

Managing Working Capital - Essay ExampleFundamentally, the operative capital is total current assets of GHS (Jain, p.13.4). Langabeer (2008) explained further that this is the blood lines necessary to finance the conversion operating speech rhythm for a hospital from delivering services to receiving funds to paying invoices for materials used (p.59). The net working capital, on the new(prenominal) hand, is the difference in GHSs current assets and current liabilities or that portion of current assets that are financed with long-term funds (Jain, p.13.4). These conceptual s definitions underscore the requirement to manage working capital because it determines the ability of an origination such as GHS to pay its debt and enhance its value. According to Langabeer, it reflects the efficiency of a hospital in the means it orders, stores and pay for goods and services, hence, the key with working capital management is to match the amount of money needed in the short term with the a mount of funds available and keep all other assets in assets with high returns (p.59). For instance, working capital management in GHS involves initiatives such as the investment in an equity fund or the purchase of property and the construction of a facility that would yield profitability. GHSs treasurer plays an authorized role in the working capital management. This is highlighted by the fact that the working capital needs of GHS washstand be affected by several factors such as the nature of business, the seasonality of operations, the production policy, market conditions and the conditions of tot up (Chandra, 2011, p.574). He must ensure an efficient management because it will inevitably lead to increased organizational performance, quality in service delivery and profitability. The activities follow the GHS working capital cycle, which as in the sequel of all organizations is a process in which it purchases or produces inventory, holds it for a time, and