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    Working Capital

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    preetirbl
    Working capital refers to the funds used to meet short-term obligations including raw materials, wages, and other day-to-day expenses. It can be classified as gross or net working capital depending on whether long-term assets are included. The amount of working capital needed depends on factors like the type of business, size, production process, and seasonal variations. Inadequate working capital can lead to inability to pay short-term liabilities on time, undertake profitable projects, or pay daily expenses. Working capital is financed through both permanent sources like shares and temporary sources like trade credits.

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    Working Capital

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    preetirbl
    4K views8 pages
    Working capital refers to the funds used to meet short-term obligations including raw materials, wages, and other day-to-day expenses. It can be classified as gross or net working capital depending on whether long-term assets are included. The amount of working capital needed depends on factors like the type of business, size, production process, and seasonal variations. Inadequate working capital can lead to inability to pay short-term liabilities on time, undertake profitable projects, or pay daily expenses. Working capital is financed through both permanent sources like shares and temporary sources like trade credits.

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    Working capital refers to the funds used to meet short-term obligations including raw materials, wages, and other day-to-day expenses. It can be classified as gross or net working capital depending on whether long-term assets are included. The amount of working capital needed depends on factors like the type of business, size, production process, and seasonal variations. Inadequate working capital can lead to inability to pay short-term liabilities on time, undertake profitable projects, or pay daily expenses. Working capital is financed through both permanent sources like shares and temporary sources like trade credits.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    4K views8 pages

    Working Capital

    Uploaded by

    preetirbl
    Working capital refers to the funds used to meet short-term obligations including raw materials, wages, and other day-to-day expenses. It can be classified as gross or net working capital depending on whether long-term assets are included. The amount of working capital needed depends on factors like the type of business, size, production process, and seasonal variations. Inadequate working capital can lead to inability to pay short-term liabilities on time, undertake profitable projects, or pay daily expenses. Working capital is financed through both permanent sources like shares and temporary sources like trade credits.

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    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 8

    WORKING CAPITAL

    Brief summary of topics


    covered
    Introductionof working capital
    Kinds of working capital

    Factorsdetermining working
    capital
    Dangers of inadequate
    working capital
    Financing of working capital
    Introduction of working capital
     Funds needed for short-term purposes for
    the purchase of raw materials, payment of
    wages & other day-to-day expenses,etc.
     The amount of funds necessary to cover
    the cost of operating the enterprise
     That part of firm’s capital which is required
    for financing short term assets
    Kinds of working capital

    KINDS OF WORKING
    CAPITAL

    ON THE BASIS OF ON THE BASIS OF


    CONCEPT TIME

    GROSS PERMANENT OR TEMPRORARY


    NET WORKING
    WORKING FIXED WORKING OR VARIABLE
    CAPITAL
    CAPITAL CAPITAL WORKIN CAPITAL

    REGULAR SEASONAL
    WORKING WORKING
    CAPITAL CAPITAL

    RESERVE SPECIAL
    WORKING WORKING
    CAPITAL CAPITAL
    Factors determining working capital

     Nature or character of business


     Size of business
     Production policy
     Length of production process
     Seasonal variations
     Credit policy
     Rate of growth of business
     Business cycles
    Financing of working capital
    SOURCES OF
    WORKING CAPITAL

    TEMPORARY OR
    PERMANENT OR
    VARIABLE CAPITAL
    FIXED CAPITAL

    COMMERCIAL PAPERS
    •SHARES
    TRADE CREDITORS
    •DEBENTURES
    ADVANCES
    •PUBLIC DEPOSITS
    COMMERCIAL PAPERS
    •LOANS FROM FINANCIAL INSTITUTIONS
    ACCURED EXPENSES
    •PLOUGHING-BACK OF PROFITS
    INSTALLMENT CREDIT
    Dangers of inadequate working capital

     Short term liabilities can’t pay in time


     Difficulties in undertaking profitable
    projects due to lack of w.c.
     Day-to-day expenses can’t pay
     It becomes impossible to utilize efficiently
    the fixed capital
     The rate of return on investments also falls
    Approaches of working capital
     Matching approach
     Conservative approach
     Aggressive approach

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