ABSTRACT
This chapter discusses the basics of working capital and current asset management. The major topics discussed included: cash management, operating cycle, and current asset/liability management. Working capital (WC) is defined as the difference between current assets and current liabilities. Airlines must implement effective working capital policies to ensure solvency. The first of these is a working capital policy that is based on the current ratio of assets to liabilities. Cash is the most liquid of any current asset and must be available to pay liabilities as they come due. Accounts receivable are an important part of current assets; that is, managers must monitor the company's accounts receivable balance to determine if the company is efficiently converting sales into cash. Developing a working capital policy is crucial to maintaining adequate reserves of current assets in order to pay current liabilities. Current Assets include: Cash, marketable securities, accounts receivable and inventory.
