Research On Working Capital Management

At present, Chinese reform of the enterprise system is deepening further and the financial system reform has been started. Financial market is also constantly developing and improving. The achievement of the strategic objectives, to a large extent, depends on the level of day-to-day financial control, especially the level of working capital management. Working capital is the most fluid and active part in the enterprises. The survival and development of the enterprise depends to a large extent on the management and operation of working capital.Comparing with the western countries, our theories and experience on working capital management have obvious shortcomings. This paper first reviews the results of research on working capital management from China and abroad. Aiming at Chinese enterprises'operation and current management level, this paper captures the problem that exits in working capital management and analyzes their causes on the basis of summing up the basic theories of working capital involved in traditional financial management. The paper then seeks the solutions from both internal and external aspects around these causes by listing a number of specific measures which would strengthen the management of working capital. Using foreign experience and results on working capital management is also addressed in a deeper way. The adoption of zero working capital management model is explained in detail and supported by the practice of successful enterprises at home and abroad. If the need of production activities and financial security are being fully considered, effective working capital management could ensure adequate liquidity of the capital, and meanwhile accelerate the turnover speed of the working capital operating. Consequently, it will bring continuous and steady profit and cash flows and reduce the risk of investment.