Net Working Capital
Short-Term Financial Management involves the management of the firm's current assets and current liabilities
- This is one of the most important and time-consuming activities of the financial manager
- There is a constant need to balance profitability and risk while attempting to maximize owner wealth
- Too high an investment in current assets reduces profitability
- Too low an investment in current assets exposes the firm to the risk of not meeting current obligations
- Both situations can lead to lower firm value
- 1994, HarperCollins Publishers