FIN/571
2014
Learning Team Reflection Owners and managers in the business need to make working capital management decisions such as inventory management, cash-flow management, accounts receivables, and supplier or vendor trade credits to ensure the company has sufficient cash-flows to pay short-term obligations. There are a few different working capital strategies a business can employ. Flexible current asset management involves holding large cash balances and inventory. The restrictive current asset management strategy requires companies to keep current assets low.
Finagle a Bagel is a young, growing business that applies the working capital trade-off strategy to manage their working capital (Parrino, Kidwell, & Bates, 2012). Married entrepreneurs purchased the business when it was a few years old and had four to five stores (University of Phoenix, 2014). The owners encountered many of the same issues commonly associated with running a young business. They had to learn to deal with customers, vendors, and suppliers; however, the larger issue was discovering how to manage their working capital. Maintaining and continually producing working capital is imperative for any …show more content…
A successful cash flow, and keen understanding of their banking relationship, will allow the companies to more comfort when taking on debt or liabilities. The strategies Finagle a Bagel use for managing working capital are no different from the plan many companies utilize. The owners established a good rapport with their bank, vendors, and suppliers (University of Phoenix, 2014) which enables them to create the opportunity for positive interest rates and trade-offs. The good interest rates assist in the short-term and long-term when they need to acquire a line of credit to pay suppliers or to expand the