Fin320 module 5

Southern New Hampshire University **We aren't endorsed by this school
FIN 320
Nov 19, 2023
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Luis Castellanos SNHU FIN-320 Module 5 As shown on the balance sheet of the business, working capital is computed by subtracting current liabilities from current assets. Cash, accounts receivable, and inventory are examples of current assets. Accounts payable, taxes, salaries, and interest payments are examples of current obligations. The definition of financial statement is the process of analyzing data from a company's financial documents and statements. Each of them mentions diverse financial elements while giving details about the business. Some statements focus on the company's assets and liabilities, while others focus on its income and expenses. The financial statements of a company are used to evaluate its financial situation and prospects for profit by creditors, market analysts, and investors. The three primary financial statement reports are the balance sheet, income statement, and statement of cash flows. Efficient working capital management help to increase earnings and profitability of a company. Working capital is a daily requirement for companies, since it is required to make payments, cover expenditures, and to buy some commodities used in the manufacturing of goods. Many firms have seasonal sales, with some months selling more than others. A compoany with enough working capital can make extra purchases from suppliers to prepare for busy months during periods when they have lower income. Working capital management focuses on maintaining a correct balance between a company's current assets and liabilities. An efficient working capital management system assists
organizations in not only meeting their financial responsibilities but also increasing their revenues. The formula to calculate working capital = current assets - current liabilities
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