This document provides an introduction and outline for a seminar on working capital management. The learning outcomes are to explain the importance of cash flow, compare financing options, and understand the difference between cash and profits. The seminar will review inventory management, receivables, and payables. It will discuss keeping inventory levels optimized, collecting receivables efficiently, and the ethics of payment terms with suppliers. Group tasks will analyze these issues in more depth with reference to additional resources.

1. Principles of
Business
Introduction to Finance –
Seminar 2: Working capital
management

2. Learning outcomes
By the end of this session you should be able to:
2
• Explain the importance of cash to a business
• Compare and contrast debt and equity
• Evaluate financing options for different types of
organisation
• Understand the difference between cash and profit

3. Review of pre-seminar work
Seminar 2: Working capital management
3
- Read Chapter 16 of core text book (Atrill & McClaney)
- Consider the following question:
“Suggest practical ways for a business to keep cash for as long
as possible”

4. The working capital cycle
4
Suppliers Customers
Company
Raw
materials/services
Trade on
credit
Product
/service
Payment
Payable days
Inventory
days
Receivable days

5. Task 1: Inventory management
-
5
1.Discuss whether businesses strive to keep
their inventory days high or low, with reasons
for your arguments.
2.How could a business manage its inventory in
order to reduce inventory days?

6. 1. Suggest reasons as to why managing receivables may
be more difficult for a new or smaller business.
2. How could a business reduce the length of time it
takes to receive payment from its customers?
3. How can a company mitigate against the risk of a
customer not paying?
6
Task 2: Receivable days

7. 7
Task 3: Managing payables
“It’s just plain good financial sense to hold off paying your suppliers for as
long as possible”
Critically discuss this point of view in groups

8. 8
Task 3 debrief: National campaigns
https://www.fpb.org/creating-change/case-studies/late-payment-hall-shame
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/315
462/bis-14-793-building-a-responsible-payment-culture-government-response.pdf

9. End of seminar
9

10. 1. Risk versus return
10
Task 3 debrief
2. https://www.crowdcube.com/pg/crowdcube-inc-about-us-1

11. 11
End of seminar