Advertisements
Advertisements
Question
What is working capital?
Advertisements
Solution
Working capital is that part of firm’s capital which is required for financing the short term or current asset. The working capital is also known as revolving capital or circulating capital or short term capital.
It is the amount of funds needed to meet the day to day operations of a business; it can be described as the excess of current assets over current liabilities.
APPEARS IN
RELATED QUESTIONS
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
Ramnath is into the business of assembling and selling of televisions. Recently he has adopted a new policy of purchasing the components on three months credit and selling the complete product in cash. Will it affect the requirement of working capital? Give reason in support of your answer.
Answer the question.
Briefly explain any four types of working capital required by a business concern.
What is meant by capital gearing ratio?
Explain any four factors that affect the capital structure of a company.
Higher working capital usually results in :
Current assets are those assets which get converted into cash
A fixed asset should be financed through
______ of a firm refers to those assets which can be converted into cash or cash equivalents in a short period of time.
Working capital is calculated as?
______ refers to the decisions regarding where to invest so as to earn the highest possible returns on investment.
______ involve identifying various sources of funds and deciding the best combination for raising the funds.
Which group consists of current assets?
Through which sources must fixed capital be financed?
Why do the large funds involved in capital budgeting require detailed analysis?
How does the Nature of Business affect fixed capital requirement?
How does fast obsolescence under Technology Upgradation affect fixed capital requirement?
What is the effect of higher expected growth on fixed capital?
