Working Capital Management - Subjective Questions

1. How does an increase in working capital impact a company's short-term liquidity position? Provide examples to support your answer.
2. Discuss the main factors that influence a company's working capital needs. How might these factors differ across industries?
3. Explain the concept of "negative working capital" and its potential implications for a business. Under what circumstances might negative working capital be considered a favorable situation?
4. Compare and contrast the strategies of aggressive and conservative working capital management. What are the potential advantages and disadvantages of each approach?
5. Analyze the relationship between profitability and working capital management. How can efficient working capital management contribute to a company's profitability?
6. In times of economic downturn, how might a company adjust its working capital management strategies to navigate the challenges? Provide real-world examples to illustrate your points.
7. Discuss the trade-offs between maintaining high levels of inventory and adopting a just-in-time (JIT) inventory management approach in terms of working capital and operational efficiency.
8. Explain the concept of the operating cycle and how it relates to working capital management. How can a company optimize its operating cycle to enhance its financial health?
9. "Cash is king." Elaborate on this statement in the context of working capital management. Why is managing cash flows crucial, and how can companies ensure they have sufficient cash to meet their short-term obligations?
10. Evaluate the role of technology and automation in improving working capital management practices. What are the potential benefits and challenges that companies might face when implementing technology-driven solutions for working capital management?