Working Capital Management Practice Exam

Working Capital Management involves the efficient management of a company's short-term assets and liabilities to ensure liquidity, operational efficiency, and profitability. It encompasses activities such as cash flow management, inventory control, accounts receivable and payable management, and short-term financing decisions. Skills covered in this domain include financial analysis, cash flow forecasting, inventory optimization, credit management, and risk assessment. Prerequisites typically include a solid understanding of financial accounting principles, financial statement analysis, and basic knowledge of corporate finance.
Why is Working Capital Management important?

• Ensures sufficient liquidity for day-to-day operations.
• Optimizes cash flow to meet financial obligations and investment opportunities.
• Minimizes costs associated with excess inventory and idle cash.
• Improves profitability by reducing financing costs and maximizing return on assets.
• Mitigates risks associated with cash shortages and credit default.

Who should take the Working Capital Management Exam?

• Financial Analysts
• Treasury Managers
• Credit Managers
• Accounting Managers
• Finance Directors

Skills Evaluated

Candidates taking the certification exam on the Working Capital Management is evaluated for the following skills:

• Financial analysis and interpretation
• Cash flow forecasting accuracy
• Inventory management efficiency
• Accounts receivable and payable optimization
• Credit risk assessment
• Knowledge of short-term financing options

Working Capital Management Certification Course Outline

1. Introduction to Working Capital Management
   • Definition and importance
   • Role in financial management
2. Cash Flow Management
   • Cash flow forecasting
   • Working capital cycle
   • Cash conversion cycle
3. Inventory Management
   • Inventory control techniques
   • Inventory turnover ratio
   • Just-in-time (JIT) inventory system
4. Accounts Receivable Management
   • Credit policy formulation
   • Accounts receivable turnover ratio
   • Collection strategies
5. Accounts Payable Management
   • Payment terms negotiation
   • Accounts payable turnover ratio
   • Vendor management
6. Short-Term Financing Decisions
   • Types of short-term financing
   • Cost of capital estimation
   • Working capital financing strategies
7. Financial Analysis for Working Capital Management
   • Ratio analysis
   • Trend analysis
   • Benchmarking
8. Risk Management in Working Capital
   • Credit risk assessment
   • Liquidity risk management
   • Interest rate risk management