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What is a Working Capital?

Working capital is the fuel for running businesses the companies. It may be stated that maintaining an adjusted amount of working capital is the first and foremost aim of business organizations. While having too much working capital is bad, an inadequate amount of working capital can create problems in running the businesses smoothly as well.

While having too much working capital is bad, having too low working capital is also a sign of weakness of a business firm. In order to keep the business running on a smooth path, the firm must maintain a healthy amount of working capital.

Risks of Having Inadequate Working Capital

Some of the risks of having inadequate working capital are as listed below.

Stagnation of growth

An inadequate amount of working capital stagnates the growth prospects of an organization. As the company cannot invest in profitable ventures with an adequate amount of working capital, its prosperity, and growth if affected. Firms that have inadequate working capital find it difficult to undertake profitable projects which affect their revenues and profitability directly. That is why having enough working capital to meet the needs of the business is necessary.

Difficulty in Meeting Targets

Firms with inadequate working capital find it difficult to meet business targets due to a lack of funds. Firms that have inadequate working capital may have to face a shortage of funds when they actually need it. Therefore, they may miss the targets of growth in business. Maintaining a solid amount of working capital is, therefore, necessary to meet business targets.

Operating Inefficiency

Businesses may fail to meet the day-to-day needs for tuning the businesses when they have an inadequate amount of working capital. This may lead to operating inefficiency. When there is no fund to meet the general expenses of a firm, the firm may find it tough to meet the expenses that are needed for smooth operations.

This may derail the firm from the path of smooth business as they may have to resort to loans from time to time. An extreme lack of working capital may even halt the business operation leading to losses and bankruptcy at the extreme.

Deterioration of Profitability

In the case of a lack of working capital, fixed assets of a firm may not be properly utilized. This may result in a lack of profitability. To stay competitive and profit from its operations, a firm must use its fixed assets.

However, if there is a shortage of working capital, the firms may not be efficient in utilizing the fixed assets. This hampers the quality of operations, leading to losses and hampering the overall profitability of an organization.

Missing Attractive Opportunities

Having low working capital renders a firm miss profitable opportunities, such as credit opportunities. As the firm struggles to meet its targets, it cannot look for attractive options and had to focus on increasing the working capital funds.

Therefore, having low working capital can strike the business where it can benefit from opportunities that may be profitable for them.

Loss of Reputation

A firm lacking in working capital cannot maintain a good financial reputation as it cannot manage its business as the lenders want. Therefore, it may have to face tougher credit restrictions. Loss of reputation also lands it in trouble while raising funds for operation. So, it falls into a vicious cycle where it is in trouble from all angles.

Conclusion

For a business firm, it is ideal to have a proper amount of working capital all the time. It is the duty of management to judge the right amount of working capital for running the organization and keep the adequate amount of working capital available for the firm to stay competitive in the business operations.

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Impact Of Credit Policy On Working Capital Management

Role of Credit Policy

It is known to all that having a good amount of working capital is necessary for the smooth functioning of businesses. For example, the credit policy of a company plays a pivotal factor in managing the working capital of a company.

Companies often need to sell their products on credit to keep and gain market share. It is not possible for all products to get sold instantly which can generate immediate revenues. Therefore, the retailers may ask for a credit to sell the products and then pay for them to the manufacturers.

A business company therefore must adhere to a good credit policy to offer the minimum days of credit to the sellers. But at the same time, the credit terms must also follow the industry norms. Therefore, a credit policy should be created in such a manner that the businesses do not find it rough to pay the bills but also, at the same time, it is not too long for the company.

Impact of Credit Policy on Working Capital Management

Various policies of businesses play key roles in the working capital management of companies. Credit policy is one of them. Let us see its impacts on working capital management as mentioned below −

Bad Debt

Sale on credit creates debtors. Companies that follow a liberal credit policy without following the credit rating of companies risk creating bad debts that would eat the profits of the company.

Selling products in bad debt for the long term can restrain the business’s existence for a foreseeable future. Therefore, businesses must resort to practices that are healthy for their survival.

Bad debt is a common feature of manufacturing companies that do not follow a strict credit policy. It is the nature of retailers and other business units in the sales process to ask for credit as much as possible. Therefore, the manufacturer must make a decision depending on the needs of the sellers and their credit history. Being too liberal is not going to fetch any fruit in the long run.

Credit from the Suppliers

While the credit policy for the sellers is important for the manufacturers, the credit policy of its suppliers of raw materials and resources also plays a key role in its business operations. If the suppliers offer a long credit period, the companies would have to rely less on working capital.

The inventories are funded by suppliers’ credit so it reduces the cash conversion cycle of a company. It is notable to mention here that getting enough time to pay suppliers credit can help the business offer credit to the sellers ultimately. So, a liberal credit policy of the suppliers can help a company to offer extended credit to its customers.

Dependence On Bank Finance

A liberal credit policy also helps companies use their own resources more reliably. This in turn helps them to rely less on bank finances. Without a liberal credit policy for suppliers, the companies would need to meet their finances that are obtained from banks.

Bank finances that have low or reasonable rates of interest can help the businesses run smoothly. If the interest is low, the manufacturing companies can offer the products to sellers at a low cost which can lower the price of products at the end of the cycle.

Conclusion

The impacts of credit policy on business companies are palpable in nature. It can be easily understood that with a great credit policy, the companies may get an upper hand in staying and growing in business operations.

When the credit policy is wrong, the businesses would find it tough to stay intact on the path of business operations. Therefore, all business organizations must understand the impact of the credit policy on their businesses and form them judiciously.

What Are The Limitations Of Chatgpt?

ChatGPT is a popular chatbot released by OpenAI in late 2023. Chatbots, or computer programs that simulate human interactions via artificial intelligence (AI) and natural language processing (NLP), can help answer many academic questions.

While using ChatGPT for your studies can be really useful, particularly for help with exam preparation, homework assignments, or academic writing, it is not without its limitations. It’s essential to keep in mind that AI language models like ChatGPT are still developing technologies and are far from perfect. Current limitations include:

NoteUniversities and other institutions are still developing their stances on how ChatGPT and similar tools may be used. Always follow your institution’s guidelines over any suggestions you read online. Check out our guide to current university policies on AI writing for more information.

ChatGPT limitation 1: Incorrect answers

Because ChatGPT is a constantly evolving language model, it will inevitably make mistakes. It’s critical to double-check your work while using it, as it has been known to make grammatical, mathematical, factual, and reasoning errors (using fallacies).

It’s not always reliable for answering complicated questions about specialist topics like grammar or mathematics, so it’s best to keep these types of questions basic. Double-check the answers it gives to any more specialized queries against credible sources.

Perhaps more concerningly, the chatbot sometimes has difficulty acknowledging that it doesn’t know something and instead fabricates a plausible-sounding answer. In this way, it prioritizes providing what it perceives as a more “complete” answer over factual correctness.

Some sources have highlighted several instances where ChatGPT referred to nonexistent legal provisions that it created in order to avoid saying that it didn’t know an answer. This is especially the case in domains where the chatbot may not have expertise, such as medicine or law, or anything that requires specialized knowledge in order to proceed beyond a general language understanding.

ChatGPT limitation 2: Biased answers

ChatGPT, like all language models, is at risk of inherent biases, and there are valid concerns that widespread usage of AI tools can perpetuate cultural, racial, and gender stigma. This is due to a few factors:

How the initial training datasets were designed

Who designed them

How well the model “learns” over time

If biased inputs are what determines the pool of knowledge the chatbot refers to, chances are that biased outputs will result, particularly in regards to how it responds to certain topics or the language it uses. While this is a challenge faced by nearly every AI tool, bias in technology at large represents a significant future issue.

ChatGPT limitation 3: Lack of human insight

While ChatGPT is quite adept at generating coherent responses to specific prompts or questions, it ultimately is not human. As such, it can only mimic human behavior, not experience it itself. This has a variety of implications:

It does not always understand the full context of a topic, which can lead to nonsensical or overly literal responses.

It does not have emotional intelligence and does not recognize or respond to emotional cues like sarcasm, irony, or humor.

It does not always recognize idioms, regionalisms, or slang. Instead, it may take a phrase like “raining cats and dogs” literally.

It does not have a physical presence and cannot see, hear, or interact with the world like humans do. This makes it unable to understand the world based on direct experience rather than textual sources.

It answers questions very robotically, making it easy to see that its outputs are machine-generated and often flow from a template.

It takes questions at face value and does not necessarily understand subtext. In other words, it cannot “read between the lines” or take sides. While a bias for neutrality is often a good thing, some questions require you to choose a side.

It does not have real-world experiences or commonsense knowledge and cannot understand and respond to situations that require this kind of knowledge.

It can summarize and explain a topic but cannot offer a unique insight. Humans need knowledge to create, but lived experiences and subjective opinions also are crucial to this process—ChatGPT cannot provide these.

ChatGPT limitation 4: Overly long or wordy answers

ChatGPT’s training datasets encourage it to cover a topic from many different angles, answering questions in every way it can conceive of.

While this is positive in some ways—it explains complicated topics very thoroughly—there are certainly topics where the best answer is the most direct one, or even a “yes” or “no.” This tendency to over-explain can make ChatGPT’s answers overly formal, redundant, and very lengthy.

What Are The 5 Cs Of Leadership?

The biggest goal of any leader is to improve employee engagement. The engagement affects your employees’ productivity, desire to contribute to organizational growth, and ability to do routine tasks. The company’s leadership plays a pivotal role in employee engagement. A great leader is someone that employees feel great to talk to. They don’t just set the mission and vision for the organization but work as an active member of the company, helping the teams achieve their goals. As a leader, you should ask yourself these questions −

Do people trust my leadership?

Do I do what I preach?

Do I communicate the goals to the team and stakeholders?

What leadership style do I follow?

Do people look up to me?

People judge your leadership based on your ability to drive your organization to success when faced with challenges. Since the leader plays the most important role in any company, the leadership team is built after careful evaluation of the individual’s qualifications, experience, and understanding of the company. Most importantly, leaders are selected based on their soft skills. Let’s discover the 5 Cs of leadership you will see in every great leader.

5 Cs of Great Leaders

Not every leader is a born leader. You learn these skills over time. Most companies select leaders that have worked in the firm as managers or are in senior-level executive posts. That’s because nobody knows the company as well as people who have been managing it for years.

How people perceive you depends on the leadership style you adopt. So, how do you know whether you are a good or bad leader, how you can improve, and where your strengths and weaknesses lie?

You can evaluate your leadership based on these five crucial Cs.

Coaching

People get inspired by their leaders. If you expect your team to follow your direction and work how you want, you need to set a great example. You must be willing to work on the tasks, small or big, on your own. No employee wants a leader that just orders around and sits back, watching their team do all the work.

You must participate in each project and help your team finish their milestones efficiently. Of course, you are supposed to be honest about your employees’ performances, which means you might have to hurt their feelings with your honest feedback. A great leader knows how to give constructive feedback in a polite way so that the employees get your feedback and work on it instead of resigning. A good leader is an excellent coach. Your team shouldn’t just admire your work, but they must learn from you.

Communicate

A leader is responsible for setting the company’s vision. What sets good leaders apart from the average ones is their communication skills. To be a great leader, you need to be a good communicator. That’s the first and most important soft skill a company looks for when building leadership. A leader is supposed to instruct the team on how to execute their responsibilities. You must be good at giving the right direction to your team so that they can understand their roles and feel free to ask you questions.

A leader isn’t just good at communicating the company’s goals with the team, but they know how to negotiate when necessary. They are also capable of resolving conflicts. To be a good leader, you must schedule meetings with your colleagues and staff to remind them of the company’s goals and check your progress on achieving long-term corporate objectives.

Commitment

The biggest difference between a leader and an employee of an organization is that the leader focuses on the company’s goals. They do everything in their power to serve the company. Once they have set the goals, they build a team and provide resources to achieve those.

A company can’t start a new project until the leader has checked and approved it. The leader ensures that all projects the company accepts are aligned with the organizational objectives and contribute to the company’s growth. Commitment is the most prominent yet difficult C of leadership. You need to develop a solid management approach that generates positive outcomes.

Connect

There’s a common misconception that a leader’s duty is to communicate with senior-level management and work on the company’s goals. These are just the parts of leadership. A great leader stays connected to the team. They talk to the employees individually and share their performance reports. They organize regular meetings to discuss the company’s status, objectives, and other issues. They are open to feedback and are willing to work on them to improve their performance.

A leader should invite employees to share their opinions on important matters. That builds their trust and makes them feel valued. They are likely to give their best performances when their voice is heard. Listen to their ideas and implement them if they seem reliable. Your team should never hesitate to bring their complaints and concerns to you.

Confidence

Your employees judge you by the way you conduct yourself. Confidence is the most important quality of a great leader. Then again, it isn’t something you are born with, but you develop over time and after learning from your leaders. Remember, there’s a very thin line between confidence and arrogance.

Bossing around people and creating an environment where only you matter is not a trait of a good leader. You should portray this confidence through your actions, communication, and by making good decisions. You should have faith in your abilities. It’s also important that you learn continuously. Just because you are a leader doesn’t mean you don’t need to learn anything anymore. With great power comes great responsibility. Show your confidence in a subtle way so that people know you are a confident leader.

Bottom Line

These were the 5 Cs of a great leader. Coach your employees, communicate with your team regularly and efficiently, connect with them, stay committed to your company’s goals, and show confidence in positive ways. These qualities will make you a good leader.

What Are The Basic Concepts Of Python?

Python is a general-purpose interpreted, interactive, object-oriented, and high-level programming language.

Features of Python

Following are key features of Python −

Python supports functional and structured programming methods as well as OOP.

It can be used as a scripting language or can be compiled to byte-code for building large applications.

It provides very high-level dynamic data types and supports dynamic type checking.

It supports automatic garbage collection.

Variables in Python

Variables are nothing but reserved memory locations to store values. This means that when you create a variable you reserve some space in memory. Let’s create a variable.

a = 10

Above, a is a variable assigned integer value 10.

Numeric Datatype in Python

Number data types store numeric values. They are immutable data types, means that changing the value of a number data type results in a newly allocated object.

Python supports four different numerical types.

int (signed integers) − They are often called just integers or ints, are positive or negative whole numbers with no decimal point.

long (long integers ) − Also called longs, they are integers of unlimited size, written like integers and followed by an uppercase or lowercase L.

float (floating point real values) − Also called floats, they represent real numbers and are written with a decimal point dividing the integer and fractional parts. Floats may also be in scientific notation, with E or e indicating the power of 10 (2.5e2 = 2.5 x 102 = 250).

complex (complex numbers) − are of the form a + bJ, where a and b are floats and J (or j) represents the square root of -1 (which is an imaginary number). The real part of the number is a, and the imaginary part is b. Complex numbers are not used much in Python programming.

Strings in Python

Strings are amongst the most popular types in Python. We can create them simply by enclosing characters in quotes. Python treats single quotes the same as double quotes. Creating strings is as simple as assigning a value to a variable.

Let’s see how to easily create a String in Python.

myStr

Thisisit!'

Lists in Python

The list is a most versatile datatype available in Python which can be written as a list of commaseparated values (items) between square bracket. Let’s see how to create lists with different types.

myList1

[

'abc'

'pq'

]

;

myList2

[

]

;

Tuples in Python

Tuples are sequences, just like lists. The differences between tuples and lists are, the tuples cannot be changed unlike lists and tuples use parentheses, whereas lists use square brackets.

Creating a tuple is as simple as putting different comma-separated values. Optionally you can put these comma-separated values between parentheses also. Let’s see how to create a Tuple.

myTuple1

(

'abc'

'pq

)

]

;

myTuple2

(

)

;

Dictionary in Python

Dictionary is a sequence in Python. In a Dictionary, each key is separated from its value by a colon (:), the items are separated by commas, and the whole thing is enclosed in curly braces. Keys are unique within a dictionary while values may not be. The values of a dictionary can be of any type, but the keys must be of an immutable data type such as strings, numbers, or tuples.

Let’s see how to create a Dictionary −

dict1

{

'Player'

[

'Jacob'

'Steve'

'David'

'John'

'Kane'

]

'Age'

[

]

}

dict2

{

'Rank'

[

]

'Points'

[

100

]

}

Classes & Objects in Python

A class is a user-defined prototype for an object that defines a set of attributes that characterize any object of the class. The attributes are data members and methods, accessed via dot notation.

An object is a unique instance of a data structure that’s defined by its class. An object comprises both data members (class variables and instance variables) and methods.

Functions in Python

function is a block of organized, reusable code that is used to perform a single, related action. Functions provide better modularity for your application and a high degree of code reusing.

Function blocks begin with the keyword def followed by the function name and parentheses ( ( ) ). Let’s create a function.

(

)

return

demo

(

“Function Called”

)

Output Function Called

What Are The Purposes Of Performance Management?

Performance management is an effective technique for aligning all primary organizational activities and sub-functions so that the organization’s emphasis is on achieving its objective. A well-designed performance management system may be critical in simplifying employees’ operations to accomplish the organization’s ultimate goal and vision.

Performance management is a much bigger system since it encompasses planning, executing, assessing, and evaluating to maximize development and productivity on an individual and organizational level.

By clearly outlining individual- and team-based tasks in the form of key performance indicators (KRAs) and fostering an awareness of shared reciprocal accountability, a sound performance management system promotes, empowers, and encourages staff growth.

Managing employee performance is one of the most difficult tasks that firms face today since it depends entirely on the individual’s dedication, competency, and clarity of performance. A performance management system may be a powerful instrument for employee motivation and growth when handled effectively via a well-thought-out incentive system and feedback mechanism.

Purposes of Performance Management

Let us have a look at some of the purposes of Performance Management −

Find Organizational Problems

Appropriate performance level specifications and appraisals can aid in diagnosing organizational problems. This record assists in diagnosing organizational issues. It provides insight into where work is going wrong and what improvements are necessary to improve the organization’s performance status.

Filtering Employees

Employees who perform poorly can have a negative impact on the entire organization, and if performance issues are not addressed, they can spiral out of control. The management makes a variety of critical decisions based on the performance management records. Appraisals provide legal and formal organizational justification for employment decisions such as promotion of exceptional performers, weeding out marginal or low performers, and training, transferring or disciplining others.

Concerning Documentation

Due to the prevalence of documentation issues in today’s organizations, human resource management must ensure that the evaluation systems in use meet the organization’s legal requirements. This database stores information about an employee’s performance level, skills, knowledge, expertise, and regular rewards.

Concern for Development

While this individual’s performance may be adequate, peers may suggest that some improvements could be made. In this case, development may include exposure to a variety of teaching methods, such as increasing the number of laboratory exercises, real-world applications, internet applications, and case analysis in the classroom.

Development of Contented Workforce

One of performance management’s goals is to stay current on engage-ment trends, to conduct employee engagement surveys, and to ensure that all efforts are made to keep employees engaged, motivated, and happy.

Feedback Mechanism

Performance management system aims to develop a systematic feedback mechanism. Its purpose is to create a path through which the employees become aware of their performance and contributions to the company. As mentioned previously, it also conveys the improvement requirements to the employee to meet the set standards.

To Encourage Teamwork, Collaboration and Communication

HR management often looks for ways to create a sense of community and teamwork within their organisations. This aims to result in improved communication and collaboration, which is good for business performance. Collaboration tools such as Slack provide the capacity for real-time communication, whereas teambuilding exercises and after work social activities help to break the ice among employees and develop a sense of togetherness and team spirit.

Determine Potential Development Areas

Determining the potential development areas is one of the main purposes of having a performance management process in an organization. By concentrating on development needs, managers and employees together can create effective plans aimed towards improvement of individual performance and, ultimately, improved organizational performance.

Conclusion

Performance management is more or less the same for all types of organizations. Nowadays, performance management is becoming integrated with talent management, career management, performance-based compensation, development, and talent management processes.

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