| Basis of Difference |
Management of Working Capital |
Cash Management |
| Definition |
Involves managing current assets and current liabilities to ensure operational efficiency. |
Focuses specifically on managing cash inflows, outflows, and liquidity. |
| Scope |
Broad scope, includes inventory, receivables, payables, and cash. |
Narrow scope, deals only with cash and bank balances. |
| Objective |
To maintain an optimal level of working capital for smooth operations. |
To ensure the firm has sufficient cash to meet short-term obligations. |
| Tools Used |
Current ratio, quick ratio, working capital turnover, operating cycle. |
Cash budget, cash flow statement, bank reconciliation, liquidity ratios. |
| Decision Areas |
Inventory control, credit policies, payment terms, and financing. |
Cash collection timing, disbursement planning, idle cash investment. |
| Time Focus |
Short to medium-term financial management. |
Strictly short-term liquidity management. |
| Impact |
Affects overall current asset and liability structure. |
Directly impacts the company's ability to stay solvent daily. |
