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Working capital can be improved by1) earning profits,2) issuing common stock or preferred stock for cash,3) replacing short-term debt with long-term debt,4) selling long-term assets for cash,5) settling short-term debts for less than the stated amounts, and6) collecting more of the accounts receivables than was anticipated and then reducing the balance required in the current asset account Allowance for Doubtful Accounts.I am sure there are additional ways to increase working capital. The concept is to increase the amount of current assets and/or to decrease the amount of current liabilities.
Realy Do You want know how working Capital be improved? Easy8 Ways...
There’s never been a better time for finance professionals to focus on better ways of managing their working capital, given the wide range of options available. So just how can an organisation make its working capital work that bit harder?
1-Manage working capital actively throughout the organization
2- Consider alternative funding
3-pay your suppliers on time
4-Negotiate discounts with your suppliers
5-Make expenses more visible
6-Manage your stock actively
7- Manage the payment process more effectively
8-Investigate the benefits of e-procurement
Its very simple.....
The working capital be improved by the (inventory, receivable and payable) will be two dimention managing working capital time is money.
if you can get money to move faster (it means collect money from debtors more quickly or reduce inventory level relative sales.
if you can get longer cerdit or an increase credit limit from supplier. you are take effectively free finance to help fund future sale...
if you get better credit from the supplier then you increase your cash resources...
By reducing Days Sales outstanding ratio, replacing short term debt with long term, Reducing Inventory days ratio, reducing creditors etc
