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प्रश्न
Answer the question.
Briefly explain any four types of working capital required by a business concern.
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उत्तर
Working capital means the capital invested in working assets or current assets such as cash, stock of goods, debtors and short term investments, etc.
The various types of working capital are:
Permanent Working Capital: It refers to the minimum amount of working capital required permanently to operate the minimum level of business activity. It determines the financing requirement in the case of fixed assets is simply the cost of the asset. It is of two types: Initial and Regular working capital.
Variable Working Capital: It is the difference between networking capital and permanent working capital. The amount of temporary’ working capital depends upon the extent of extra demand in season. It is of two types: seasonal and special working capital.
Gross Working Capital: Gross working capital refers to the total amount of funds invested in the current assets.
Gross Working Capital = Book value of current assets Working Capital: Networking capital means the excess of current assets over current liabilities. Current assets include cash at bank, sundry’ debtors, cash in hand, bills receivable, etc. Current liabilities include bills payable, sundry creditors, short term loans, etc.
Net Working Capital = Current assets – Current liabilities
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संबंधित प्रश्न
Explain the following as factors affecting the requirements of working capital:
Seasonal factors
Explain the following as factors affecting the requirements of working capital:
Production cycle
Amrit is running a ‘transport service’ and earning good returns by providing this service to industries. Giving reason, state whether the working capital requirement of the firm will be ‘less’ or ‘more’.
Fixed Capital Working Capital
Why is working capital also known as circulating capital?
Higher working capital usually results in :
What are the important determinants of working capital requirement?
______ of a firm refers to those assets which can be converted into cash or cash equivalents in a short period of time.
Net working capital may be defined as the:
Dhaval Acharya, after acquiring a bachelor’s degree in Hotel Management joined his father’s chain of vegetarian restaurants in Ahmednagar. Being young and enterprising, he suggested his father to add a new section of vegetarian bakery items which required an investment of ₹ 5 crores. His father Mr. Aariketh Acharya suggested him to take the decision with caution and understood everything comprehensively as bad decision may damage the financial fortune of business.
Identify the decision suggested by Mr. Aariketh Acharya. State by giving any three reasons as to why he must have advised his son to take decision with caution.
