Ch 4 · Working Capital Management

📘 Core concepts

1. 1WC = Current Assets − Current Liabilities; gross WC = total CA.
2. 2Operating cycle = Inventory days + Debtors days − Creditors days.
3. 3Approaches: Conservative (high WC, low risk), Aggressive (low WC, high risk), Matching/Hedging.
4. 4Receivables management: credit policy (terms, period, standards, collection).
5. 5Cash management: Baumol model (transaction motive), Miller-Orr model (random cash flow).