Systems Employed To Plan And Control Working Capital

The importance of working capital to the Apple Inc. organization

A company’s working capital is measured by its ability to function and its short-term financial stability. There are enough short-term debt payments and expenditures to cover the company’s short-term cash flow based on the company’s networking capital. There are several benefits to using a working capital management system, but it is essential for a company’s long-term success (Direction). Correctly carried out, it may assist you in obtaining a higher rate of return on your capital while also enhancing your revenue, money longevity, and liquidity. Methods for managing various types of working capital, including cash, inventory, debtors, and so on, such as EOQ and JIT, are employed (Direction). Multiple components of current assets are managed using these design and deployment processes. Keeping track of current obligations, it’s as simple as updating your financial reserves.

Therefore, Apple Inc. uses working capital as a prevalent system of measurement of its liquidity, overall health, and efficiency. It mirrors the results of different activities of the organization, including debt management, payment to suppliers, revenue collection, and inventory management (Fabo, Beblavý, and Lenaerts 2017). Working capital is able to perform this because it includes accounts payable and receivable, debt portions, inventory, and cash due within a given period of an accounting year (Katsikea, Theodosiou, and Makri 2019). Working capital helps the organization manage its liquidity by thoroughly analyzing its payable or incurred expenses. It also assists in decision-making by accurately analyzing the day-to-day requirements of funds operations (Boisjoly, Conine Jr and McDonald IV 2020). This helps the finance team to appropriately manage the money accordingly decide on the availability of funds. Working capital also adds value to the business through the creation of goodwill market enhancement. It also comes in handy during cash crunch situations.

Working capital can be improved by:

  • Earning profits
  • Issuing preferred or common stock for cash
  • Replacing short-term debt with long-term debt
  • Selling long-term assets for cash
  • Settling short-term debts for less than the stated amount
  • Collecting more of the accounts receivables than was anticipated and reducing the balance required in the current asset account Allowance for Doubtful Accounts (Borgert et al. 2020).

The risks where working capital management is not applied

The absence of skilled capital is affecting the financial strength of our clients. The non-payment of financial institutions, suppliers, and other unsecured creditors could result from working capital credit problems. As a result, cash flow mismanagement is commonly regarded as a factor in financial failures, such as a failure to pay bills on time. Overtrading, or the practice of making excessive cash requests during periods of growth, results in higher. Therefore the Failure of Apple Inc.’s systems to monitor its working capital management can be due to internal and external reasons. Internal reasons could include the sudden resignation or demise of the person charged with the task from the organization (Borgert et al., 2020). On the other hand, external reasons include unexpected fluctuations in the rate of foreign currency exchange that leads to transactional exposure (Borisov and Pochukaeva 2021). Moreover, a host country can suddenly raise its taxes beyond the capacity of the system to handle them. Incidentally, these external factors are beyond the control of the organization.

The systems and methods used to plan working capital

Methods to Plan Working Capital Critique Methods
By managing inventory and procurement Help to track the inventory amount effectively. On the other hand, it can occasion stock damage because of the long storage time.
Timely payment of vendors Timely payment of suppliers breeds good relationships with them for better working relationships.
Improve the receivables process. It can be better executed using the latest technology software, which is an added cost to the business.
Effective management of debtors Debtors must be given a small window to pay for the goods and services offered to them (Bowen III et al. 2017). This might drive away some business prospects.


Boisjoly, R. P., T. E. Conine Jr, and M. B. McDonald IV. 2020. “Working capital management: Financial and valuation impacts.” Journal of Business Research 108: 1-8..

Borgert, T., J. D. Donovan, C Topple, and E. K. Masli. 2020. “Impact analysis in the assessment of corporate sustainability by foreign multinationals operating in emerging markets.” Evidence from manufacturing in Indonesia’, Journal of Cleaner Product 260.

Borisov, V. N., and O. V. Pochukaeva. 2021. “Analysis and forecast of competitiveness of russian investment equipment in the foreign markets.” Economic and Social Changes: Facts, Trends, Forecast 14 (2): 43-58.

Bowen III, D. E., Frésard, L. and Taillard, and J. P. 2017. “What’s your identification strategy?” Innovation in corporate finance research’, Management Science, 63 (8): 2397-2771.

Direction, S., Performance enhancement in international markets: Why market intelligence and sales strategy are critical.

Fabo, B., M. Beblavý, and K. Lenaerts. 2017. “The importance of foreign language skills in the labour markets of Central and Eastern Europe.” Assessment based on data from online job portals Empirica (44): 487–508.

Katsikea, E., M. Theodosiou, and K. Makri. 2019. “European Journal of Marketing.” The interplay between market intelligence activities and sales strategy as drivers of performance in foreign markets 53 (10): 2080-2108.