the daily financial operations of a firm are primarily controlled by managing the :
a) total debt level.
b) working capital.
c) capital structure.
d) capital budget.
e) long-term liabilities
Answer. b) working capital.
Working capital is that difference between a company’s current assets (cash or accounts receivable, inventory) and current liabilities (accounts payable or short-term debt). The working capital management includes all the operations related to the daily finance of the firm like purchasing, inventory handling, sales, and cash management. This involves, among a few others, having quick cash to be used as short-term obligations, a way of paying employees and other suppliers and no interruption in the going on of the business. Working capital management is the key in cash flows, as it allows to avoid cash shortages, and indexed money staying profitable while day-to-day operations of the company continue. Types of the other ones such as the total debt level, debt structure, capital budget and long-term liabilities will be relevant for the strategic financial decisions and long-term planning to other than immediate daily operations of a business.