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 not have enough funds of [...]
In this article we will discuss about the working capital requirements of a business. Factors Determining Working Capital Requirement: There is no set of universally applicable rules to ascertain working capital needs of a business organization. The factors which influence the need level are discussed below: a. Nature of business: If we look at the balance sheet of any trading [...]
The following points highlight the top ten sources of working capital finance. The sources are: 1. Intercorporate Loans and Deposits 2. Commercial Paper (CP) 3. Funds Generated from Operations 4. Retained Profit 5. Depreciation Provision 6. Amortisation Provisions 7. Deferred Tax Payments 8. Accrued Expenses 9. Deposits and Advances 10. Public Deposits. Source # 1. Intercorporate Loans and Deposits: In [...]