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what is meant by working capital?
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Answer / chitra pandian
An amount which is used to meet the day to day operation of
the business is known as Working Capital. It not an amount
which is invested by the owner of the business. This
working capital may arises by way deducting current
liabilities from current assets. In simple WC = CA - CL.
| Is This Answer Correct ? | 21 Yes | 1 No |
Answer / balureddy
working capital is capital utilizing day to day transactions
of a firm
| Is This Answer Correct ? | 7 Yes | 2 No |
Answer / laymanblog
The funds which are required to carry the day to day
operations of an company. Its basically the short term funds
required to carry the business. The number(WC=CA-CL) depends
on sector to sector(basically fmcg sector has even negative
wc, which doesnot mean its not performing well, it means it
could able to pay its current liabilities from its current
assets itself. The days of Creditor Turnover (CTR), and Debtor
Turnover (DTR) has to be considered)
| Is This Answer Correct ? | 4 Yes | 1 No |
Answer / sri
Generally a company needs two kinds of finances long term and
for short term. Though long term capital is important it is
the short term capital that keep a company running. It is this
short term capital which is referred to as working capital. It
is useful in meeting short term obligations. Without adequate
working capital its impossible to run a business.
It is represented by
Current assets-Current liabilities.
| Is This Answer Correct ? | 4 Yes | 1 No |
Answer / lokesh bhamu
working capital is capital required for day to day operation of a firm including daily wages, short term needs, other expenses and current liabilities. working capital amount depend on cash cycle. shorter the cash cycle lesser working capital required as same capital can rotated. higher working capital compared to industry average indicates that large amount of assets invested as current assets and may not be beneficial for firm.
it is deference of current assets and current liability but some time it consider only amount invested in current assets(gross working capital).
| Is This Answer Correct ? | 3 Yes | 1 No |
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