The Management of Working Capital in an International Company
The underlying objective of a cash management programme is to ensure that the pattern of cash balance employed by a given company is justifiable in terms of overall profitability. In effect, this simply means that if cash-using activities are charged for the use of that cash at a rate which approximates to the current cost of capital to the company (including exchange cover) and activities which are (or could be) cash-generating are credited at a similar rate for their provision of cash, no greater profitability could be secured by rearranging cash balances.
KeywordsCash Flow Balance Sheet Transfer Price Working Capital Cash Balance
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