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Types of Organizational Structures

In: Business and Management

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Types of Organizational Structures Patricia R. Blandford FIN/571 February 3, 2014 Instructor: Zenhu Jin

Introduction

Although working capital may be hard for some business owners to comprehend,

there is a tool that is useful to help with this. By understanding the operating cycle, a

company can analyze it accounts receivables, accounts payables and inventory in terms

of days. The operating cycle cannot be financed using the accounts payable only.

Working capital is also needed to do this.

Working capital is one of the most difficult financial concepts for the small-business

owner to understand. It is the amount of current assets that exceed current liabilities. A

business evenually needs short-term working capital. The following are sources

businesses use for short-term working capital.

• Equity- funds invested from personal resouces, friends, or other third party.

• Trade creditors- creditors in which you have a good relationship with due to

paying on time may offer help in providing short-term capital.

• Factoring- Where a company buys an account recievable after an order has been

filled and contiues to handle the collection.

• Line of credit- given to businesses that have collateral and are well capitalized by

equity. It is money that is borrowed for short-term needs as they arise.

• Short-term loan- businesses that don't qualify for credit may obtain a short-term

loan. This is allowed if a company has a good banking relationship.

Business may also obtain long-term working capital to help finance its business

operations. Some examples of this are the following:

• Equity Capital- this capital is secured by a company through trading stock to

shareholders for

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