INVESTMENT APPRAISAL considers the long-term plans of the business and identifies the right projects to adopt to ensure financial objectives are met. The projects undertaken will nearly always involve the purchase of non-current assets at the start of the process.
For a business to be successful, as well as identifying and implementing potentially successful projects, it must survive day-to-day. WORKING CAPITAL MANAGEMENTis concerned with the management of liquidity – ensuring debts are collected, inventory levels are kept at the minimum level compatible with efficient production, cash balances are invested properly, and payables are paid on a timely basis.
All businesses need finance. A key financial management decision is the identification of the most appropriate SOURCES, taking into account the requirements of the company, the likely demands of the investors and the amounts likely to be made available.