Case Study On Working Capital Management Of Company A

Working capital management has a great influence on financial management ofenterprise, the level of working capital management can decide the capacity of enterpriseprofit; the management of working capital is the fundamental of financial management. Sowe have to pay great attention to working capital management. This article is based on thestudy of fore person, generalized two analysis frames of the traditional and new workingcapital management. Analyze present condition of working capital management of companyA, in order to discover problems and give some suggestions.This thesis mainly used case study method, chose the working capital management ofcompany A as study object, and conducted research according to the thought of "casecontent--case analysis--case enlightment". In case content, I gave a brief induction about thesituation of automotive industry and company A，then examined the status quo of workingcapital management of company A, I found the inventory level of Company A is higher thanthe industry average; the ratio of current liabilities to total liabilities is very high or evenautomobile industry; current assets turnover ratio is lower than the industry average; accountsreceivable turnover ratio is extraordinarily high; working capital management of Company Ais inefficient.In case analysis, under the framework of general working capital management, I found:a higher level of inventories is because it contains a large amount of delivered commoditiesand stock commodities; current liabilities to total liabilities ratio is very high because of thehigher level of accounts payable and less long-term debt; low current asset turnover is mainlydue to long inventory turnover period; extraordinarily high accounts receivable turnover ratiois due to China’s auto sales credit system is not perfect; other reasons for the low level ofworking capital management: the high proportion of current assets to total assets of CompanyA; company A holding a large amount of monetary funds, virtually no trading financialassets,the awareness of using idle funds is weak.Under the framework of channels, I found the funds of short-term liabilities iscentralized in the outlets of produce and buy, the marketing outlet takes up an own funds; the slow speed of working capital of marketing outlet to slow speed of whole turnovers ofworking capital.Suggestions: reduce a current liability margin. make use of some none-current liabilities,lower financial risk; lead zero-working capital policy; perfect our country loan system of carsale.