Tag Archives | Working Capital

Overtrading and Under Capitalization | Working Capital

In this article we will discuss about the impact of overtrading, under capitalization on working capital. Impact of Overtrading on Working Capital: Overtrading arises when a business expands beyond the level of funds available. Overtrade means an attempt to finance a certain volume of production and sales with inadequate working capital. If the company does […]

How to Calculate Working Capital? (With Formula)

The following article will guide you about how to calculate working capital. One of the important objectives of working capital management is by maintaining the optimum levels of investment in current assets and by reducing the levels of current liabilities, the company can minimize the investments in working capital thereby improvement in return on capital […]

Working Capital: Meaning and Components | Business

In this article we will discuss about:- 1. Meaning of Working Capital 2. Components of Working Capital 3. Gross and Net Working Capital 4. Permanent and Temporary Working Capital 5. Positive and Negative Working Capital 6. Objectives. Meaning of Working Capital: Working capital management is a significant in financial management due to the fact that […]

Operating Cycle and Its Functions | Working Capital

In this article we will discuss about operating cycle and its functions. Working capital is the life blood of any business, without which the fixed assets are inoperative. Working capital circulates in the business, and the current assets change from one form to the other. Cash is used for procurement of raw materials and stores […]

Working Capital: Meaning, Concepts and Diagrams

The below mentioned article provides a study note on Working Capital:- 1. Meaning of Working Capital 2. Concepts of Working Capital 3. Permanent and Temporary 4. Adequate but Not Excessive. Meaning of Working Capital: Working capital is that part of a firm’s capital which is required to hold current assets of the firm. Examples of […]

Determining Working Capital Requirements

The following points highlight the twelve major factors determining working capital requirements. The factors are: 1. Nature of Business 2. Size of Business 3. Manufacturing Cycle 4. Production Policy 5. Business Cycles 6. Conditions of Supply of Raw Material 7. Terms of Credit to Customers 8. Credit from Suppliers 9. Stock Turnover Ratio 10. Price […]

Working Capital: Meaning, Sources and Uses

In this article we will discuss about Working Capital:- 1. Meaning of Working Capital 2. Sources of Working Capital 3. Uses. Meaning of Working Capital: In common usage, the term funds means cash. However, accountants and financial executives think of ‘funds’ in a broader sense. They view the funds available to a business enterprise as […]

Working Capital: Definition, Classification and Sources

After reading this article you will learn about Working Capital:- 1. Definition of Working Capital 2. Need for Working Capital 3. Classification 4. Determinants 5. Components 6. Financing 7. Inadequacy 8. Remedies 9. Assessing Working Capital Requirements 10. Operating Cycle (O. C.) Approach or Cash Working Capital Approach 11. Financing Working Capital. Contents: Definition of […]

Cash Management and Working Capital

Cash is the medium of exchange on the common purchasing power and which is the most important component of working capital. It includes coins, currency, cheques held by the firm and the balances in its bank accounts. Sometimes near-cash items also are included.’ Cash is the basic input required to keep the firm running on […]

Term Loan: Meaning, Feature and Appraisal Procedure

After reading this article you will learn about Term Loan:- 1. Meaning of Term Loans 2. Features of Term Loans 3. Financial Institutions 4. Appraisal Procedure for Granting Term Loan. Meaning of Term Loans: The medium or long-term loans are popularly known as ‘Term loans’ which are provided by the specialized financial institutions specially set […]

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