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Q.

What is meant by working capital?

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Asked by anantharaman, 14 Nov '09 09:32 pm
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Answers (8)

 
1.

Working capital means, "Assets available for use in the production of further assets." Working capital, also known as net working capital or NWC, is a financial metric which represents operating liquidity available to a business. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. It is calculated as current assets minus current liabilities. If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit.

Working Capital = Current Assets − Current Liabilities

A company can be endowed with assets and profitability but short of liquidity if its assets cannot readily be converted into cash. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing invento ...more
Answered by Jack Johnson, 14 Nov '09 09:46 pm

 
  
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2.

Working capital is a financial metric which represents operating liquidity available to a business. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. It is calculated as current assets minus current liabilities.
Answered by Good Citizen, 14 Nov '09 10:48 pm

 
  
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3.

When u have plant n equipment say worth 500 crores, u may further need to have another (say ) 50 crores for running the day to day affairs of the company involving purchase of raw materials n storage (inventory cost ) , salary of employees , expenses to meet packaging and selling , administrative cost etc . Some of these items u may take on credit (current liabilities) also . Now when ur products get sold in the market u have cash accruals (accounts receivables ie current assets) . So at a time u have both current assets as well as current liabilities . For calculating working capital the formula is : working capital = current assets - current liability .
Answered by sk singh, 15 Nov '09 01:06 pm

 
  
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4.

Assets available for use in the production of further assets ..........Current assets minus current liabilities. Working capital measures how much in liquid assets a company has available to build its business. The number can be positive or negative, depending on how much debt the company is carrying. In general, companies that have a lot of working capital will be more successful since they can expand and improve their operations.
Answered by PARTHA PATHAK, 14 Nov '09 10:29 pm

 
  
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5.

The money at disposal to invest in business
Answered by Ramesh Agarwal, 14 Nov '09 10:01 pm

 
  
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6.

There r two concepts.One is the gross n the other is net.Gross concept means the total current assets(money required to meet day today expenses).The net concept is current assets minus current liability.It says the amount of money arranged from long term sources to finance the working capital requirements.
Answered by Damodar Biswal, 14 Nov '09 09:45 pm

 
  
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7.

Hard Cash so START UP a business
Answered by John Mascarenhas, 14 Nov '09 09:41 pm

 
  
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8.

Capital meant for running business/work
Answered by Ashish, 14 Nov '09 09:34 pm

 
  
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