Short-term financial management decisions of a firm are discussed in this chapter. Short-term, or current, assets and liabilities are collectively identified as working capital. In this chapter management of accounts receivables, inventories, cash, and marketable securities are discussed respectively. Credit management is an important aspect of a firm’s operation. It involves several trade-offs with respect to sales, write-off of non-collectibles and financing costs of accounts receivables. A careful evaluation is needed when making decisions about different aspects of credit management. Inventory management is discussed briefly. Cash and marketable securities are explained in a detailed manner.
