Capital Budgeting and Working Capital in Corporate Finance

Long Term Capital Investment Decisions for Analysts and Financial Managers

Capital Budgeting and Working Capital in Corporate Finance

What you’ll learn

  • Explain Capital Budgeting Techniques in Corporate Finance.
  • Explain Current Asset Management in Corporate Finance.
  • Explain Working Capital Management in Corporate Finance.
  • Explain Capital Budgeting and Working Capital Management in Financial Management.

Course Content

  • Capital Budgeting –> 2 lectures • 16min.
  • Working Capital Management –> 7 lectures • 43min.

Capital Budgeting and Working Capital in Corporate Finance


Capital Budgeting and Working Capital in Corporate Finance

Corporate Finance is a Financial Management subject that deals with how a corporation reports and addresses long-term funding sources and capital investment decisions which are Capital Budgeting; Finance Decisions, and Dividend Decisions which are Capital structure related and, short-term sources of funding which are Working Capital Finance or Current Assets Management.

In this course, Capital Budgeting and Working Capital in Corporate Finance, we discuss Fund flows and Capital Investment Decisions, along with principles of Capital Budgeting Techniques and the different concepts and measurements employed in Capital Budgeting; also discussed fundamentals in Working capital Management.

In this course, what is also discussed is, Current Assets Management in Corporate Finance, along with Short Term Assets and Financing of Short run resources of a firm.

The management of such assets of a firm is in general called Working Capital Management.

There are two different methods followed by any firm, in managing their Fixed Assets and Current Assets.

In the case of Fixed Assets, the operational implication is to use discounting and compounding techniques to adjust the value of benefits accruing from such assets over a period of time.

However, in the case of Current Assets Management, the time factor remains not crucial as a decision variable.

Hence, in Current Assets Management, the stock-in-trade of working capital is short-term assets that lose its identity fairly quickly, usually within an operating cycle of less than an year.

There is also a question of Profitability versus Liquidity and Risk that the firm encounters while dealing with Working Capital or in Current Assets Management.

Current Assets Management hence should aim at striking a balanced view such that there exists an optimum amount of short-term assets, at the same time, solving any impending Working Capital Management issues.

What is discussed, hence, is

* Theory of Working Capital,

* Basic Concepts, Policies, and Strategies employed in Working Capital Management,

* Financing of Working Capital,

* Components of Working Capital as well as

* Cash, Marketable Securities, Inventories, and Receivables Management.


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