A Brief Discussion and Analysis into the Definition and Importance of Term Paper

A Brief Discussion and Analysis into the Definition and Importance of such a Concept within the World of Operational Management - Term Paper Example Whereas asset management is necessarily one of the primal duties that any manager must necessarily engage in, asset management cannot and should not be understood as something of a monolithic term. Accordingly, both long and short term assets exist. Oftentimes, within the realm of asset management, the reader or individual is led to the belief that nearly all asset management must necessarily be long-term However, the fact of the matter is that short-term asset management is a process that requires a far higher percentage of the manager’s time than does long-term asset management. Although the planning and implementation stage of long-term management is something that necessitates careful analysis, short-term asset management is a process that must be engaged with each and every day and at almost every juncture of the business process.. In such a way, in order to understand this continual process of short-term asset management, the preceding analysis will review, define, and p roject the ways in which short-term management of assets takes place within a typical firm and the means by which its comes to be of extreme importance. Through such an analysis, it is the hope of this author that the reader will gain a more definitive understanding of what short-term asset management means and the way in which they can have both a positive and detrimental impact upon the level to which a given firm/entity/organization can hope to compete within the current market. Within its most basic definition, a short term asset is an asset that is to be sold and converted into liquid currency within the space of one year’s time. Although there are exceptions to this â€Å"one year† rule, the broad majority of industry and business ascribes to this calendar year definition as a means of delineating short term assets from long term assets. As can be seen by such a broad definition, the level of asset management that must necessarily be engaged with as a means of dr awing a degree of profitability from such a practice is necessarily of dire importance. Moreover, whereas the long term asset management process entails a high degree of planning and forethought, short term asset management must be concentric upon key timing and a perennial awareness of how financial actions and decisions will ultimately affect the bottom line of the firm (Hay & Lourie, 1996). Within this particular understanding, the analyst/reader is able to come to the conclusion that short term asset management encompasses a very large part of the day to day financial decision making structure that defines the way in which a manager or firm integrates with the outside world and the business process/resources at her/her disposal. Whereas all assets facilitate the financial structure and process of a business in one way or another, the reality of the matter is that the day to day liquidation and management of short term assets is one of the most effective means by which liabilitie s and debts can be managed by incremental decisions made to leverage the way in which short term assets are handled and applied. Within such a scope of understanding, short term assets can be defined as cash, inventory, prepaid expenses, accounts receivable, marketable securities, and a variety of other items. As can be seen from the shear scope of the list, the level to which effective management of each of these tools is of vital importance with regards to deciding whether or not a firm or entity will be viable. From an even broader perspective, it can be noted with regards to business management that many times an entity succeeds or fails not based upon its overall level of profitability, as a percentage of overall investment, but as a function of the fact that effective budgeting, tracking of income and outflow is not managed correctly. As such, short term management necessarily lends the reader to understand a certain level of the importance of cash flow as a means of keeping a ny business or entity viable (Mouritsen, 2011). Although the preceding list is helpful in understanding