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study material on finance 23

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PRESENTED BY AJAY KUMAR.B WORKING CAPITAL CONCEPT OF WORKING CAPITAL   CONCEPT OF WORKING CAPITAL OR CIRCULATING CAPITAL INDICATES CIRCULAR FLOW OF MONEY IS DAY-TO-DAY OR ROUTINE ACTIVITES OF BUSINESS. IN BROAD SENCE WORKING CAPITAL IS USED TO DENOTES THE TOTAL CURRENT ASSETS. IMPORTANCE OF WORKING CAPITAL  IMPORATNCE OF WORKING CAPITAL Cash discount Liquidity and solvency Expansion facilitated Profitability increased. TYPES OF WORKING CAPITAL         1.On the basis of concept (a) gross working capital (b) Net working capital 2.On the basis of Requirement (a) permanent (b) Variable exp- seasonal GROSS WORKING CAPITAL (GWC)  Gross working capital (GWC) GWC refers to the firm’s total investment in current assets. Current assets are the assets which can be converted into cash within an accounting year (or operating cycle) and include cash, short-term securities, debtors, (accounts receivable or book debts) bills receivable and stock (inventory). NET WORKING CAPITAL (NWC) Net working capital (NWC)  NWC refers to the difference between current assets and current liabilities.  Current liabilities (CL) are those claims of outsiders which are expected to mature for payment within an accounting year and include creditors (accounts payable), bills payable, and outstanding expenses. PERMANENT AND VARIABLE WORKING CAPITAL   Permanent or fixed working capital A minimum level of current assets, which is continuously required ...
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