Working capital management includes the relationship amongst a firm’s short-period assets and its short-term possession. The end of working capital management is to insure that a firmly is able to maintain its operations and that it has enough ability to meet both growing short-term principal and upcoming active expenditures. The management of working capital involves managing inventories, accounts receivable and payable, and cash.
Working Capital is the money used to make goods and pull sales. The less Working Capital used to attract sales, the higher is likely to be the return on investment. Working Capital management is about the commercial and financial aspects of Inventory, credit, purchasing, marketing, and royalty and investment policy. The higher the profit margin, the lower is likely to be the level of Working Capital tied up in making and selling titles. The quicker that we make and sell the books the higher is likely to be the return on investment. Thus when we have been using the word investment in the chapter on pricing, we have been discussing Working Capital.