Explain the term 'working capital' and why it is important for a multinational company like Johnson & Johnson.
Why This Is Asked
FLDP participants rotate through roles like cost accounting and financial planning, where working capital directly affects decisions. It assesses foundational finance knowledge.
General Approach
Start with a simple definition, then give a Philippine industry example. End by linking it to J&J's portfolio and how you'd apply the concept in a rotation.
Sample STAR Answer▾
Situation
In my accounting class, we were tasked to analyze the working capital cycle of a listed manufacturing company as a group project.
Task
I needed to define working capital and demonstrate its real-world impact on liquidity and operational efficiency.
Action
I explained that working capital is current assets minus current liabilities. I used Nestlé Philippines as an example, showing how a negative cash conversion cycle can fund growth. I related it to J&J by saying efficient working capital lets the company invest in R&D without relying as much on external financing.
Result
My professor noted the practical application. My group got a high grade, and I later referenced this in a case competition, tying it to stakeholder value.
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