Final answer:
Working capital is the difference between a company's current assets and liabilities, and calculating it involves subtracting current liabilities from current assets. To improve this capital, organizations should manage receivables and payables, optimize inventory, and have flexible financing. Effective cash management as a controller would involve forecasting, balancing liquidity with investment returns, and implementing pooling and netting strategies.
Step-by-step explanation:
Working capital is a financial metric that represents the difference between a company's current assets and current liabilities. It is vital for ensuring that a firm has enough short-term assets to cover its short-term liabilities. To calculate working capital, you would use the formula: Working Capital = Current Assets - Current Liabilities.
To improve working capital, a healthcare organization can manage its receivables and payables efficiently, optimize its inventory, and ensure it has access to flexible financing options. Effective cash management strategies include maintaining sufficient cash reserves, managing the timing of cash flows, using cash forecasting, and investing in short-term securities.
If I were the controller in charge of managing cash, I would employ a combination of cash forecasting, maintaining a balance between liquidity and return on investments, and utilizing cash pooling and netting to manage cash effectively. These methods help in understanding future cash requirements, optimizing returns from idle cash, and reducing transaction costs respectively.