A goal programming model for working capital management | Zendy

Mihir Dash | Zendy; Rani Hanuman | Zendy

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A goal programming model for working capital management

Author(s) -

Mihir Dash,

Rani Hanuman

Publication year - 2015

Publication title -

journal of management and science

Language(s) - English

Resource type - Journals

eISSN - 2250-1819

pISSN - 2249-1260

DOI - 10.26524/jms.2015.2

Subject(s) - working capital , market liquidity , business , fixed asset , fixed capital , finance , profitability index , economics , financial capital , microeconomics , capital formation , profit (economics) , production (economics)

This paper proposes a goal programming model for working capital management. Goal programming is necessary to model the working capital decision, as a balance has to be achieved between the conflicting objectives of liquidity and profitability. The model determines, for given working capital turnover and fixed assets turnover ratios, how funds should be maintained between working capital/current assets and fixed assets to achieve targeted levels of liquidity and profitability, whilst minimizing the opportunity cost/loss of excess liquidity.

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