What is the primary focus of working capital management?

The primary focus of working capital management is to ensure that a company has sufficient resources to meet its short-term obligations and operate effectively. By maintaining adequate working capital, an organization can manage its day-to-day operations, including meeting payroll, paying suppliers, and covering other operating expenses. This involves balancing current assets, such as cash, accounts receivable, and inventory, with current liabilities like accounts payable and short-term debt.

While maximizing profits and managing short-term investments are important aspects of overall financial management, they are not the primary aim of working capital management. Similarly, reducing long-term debt pertains more to overall financial strategy than to the specific focus of working capital, which is predominantly about short-term asset and liability management to support daily business activities.