discuss the salient working capital management strategies in an organisation of your choice,

Expert Solution

Ans: There are three types of working capital strategies for the purpose of financing the net working capital of the firm which are as follows:

1 Conservative Strategy: In this working capital is financed with low risk and low profit. Apart from fixed assets and permanent current assets temporary working capital is also financed by long term financing sources.

2 Aggressive Strategy : This policy is focused towards high profitability .It is a high risk high profitability strategy .In this strategy long term funds are utilized to finance the only fixed assets and a part of permanent working capital. Complete temporary working capital and a part of permanent working capital are also finances by short term funds.

3 Hedging Strategy : In this strategy working capital is financed with moderate risk and profitability. In this kind of strategy each of the asset financed by the debt instrument having the same maturity.

ekkarill92 answered 1 year ago

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