What is working capital management concerned with?

Working capital management is primarily concerned with managing a company’s short-term assets and liabilities to ensure that it has sufficient liquidity to carry out its operations efficiently. This involves determining the optimal mix of current assets, such as cash, inventory, and receivables, and current liabilities, like accounts payable and short-term debt.

The focal point of working capital management is to maintain a balance that supports the company’s day-to-day operations while minimizing costs and maximizing profitability. Effective management allows a business to meet its short-term obligations and invest in operational needs, creating a smoother cash flow and reducing financial risks.

Other options either pertain to longer-term financial strategies, such as maximizing long-term investments or reducing fixed costs, which are not the primary focus of working capital management. Additionally, increasing employee wages is related to compensation and labor costs rather than the management of working capital specifically.