Free ACCA FFM Working Capital Management Study Guide

Overview

This module covers working capital management fundamentals, including the operating cycle, inventory control techniques, and receivables/payables management. Topics include EOQ model, ABC analysis, credit policy, and factoring invoice discounting.

1. Working capital concepts and policies

• Elements of working capital and the operating cycle
• Cash conversion cycle and liquidity vs profitability trade-off
• Aggressive vs conservative working capital policies

2. Inventory control

• EOQ, reorder level, and safety stock
• ABC analysis and basic JIT concepts
• Balancing ordering, holding, and stockout costs

3. Receivables and payables management

• Credit policy, terms, and early settlement discounts
• Ageing schedules, credit control, and collection procedures
• Factoring and invoice discounting vs internal administration