Concept of Working Capital

Concept of Working Capital:

The concept of working capital comprises meaning of working capital and its nature. Working capital is investment in the current assets. Devoid of this investment, we can’t operate our fixed assets correctly. For getting good gains from fixed assets, we require buying some current assets or paying some expenditures or invest our money in current assets. For illustration, we keep some of cash that is one of the main parts of working capital. At any time, our machines might require repair. Repair is revenue expenditure however without cash, we can’t repair our machines and with no machines, our production might delay. Similar to this, we require inventory or to invest in debtors and other short term securities.

On the base of Concept, we can classify our working capital into two parts:

1945_working capital.jpg

1. Gross Working Capital:

In this working capital, we study gross working capital. We do not remove current liabilities in this concept however we employ current liabilities as source of fund. Assume that if we buy goods on credit, it means saving our cash and we can utilize this as working capital for paying other expenditures.

2. Net Working Capital:

Under this, we employ net working capital. For this, we first remove all our current liabilities from our current assets. Surplus of current assets over current liabilities will be current assets. We have to keep minimum level of working capital in our business for operation of business actions. This concept is too used for the preparation of balance sheet. In vertical form of balance sheet, we illustrate excess of current assets over current liabilities.

Latest technology based Finance Online Tutoring Assistance

Tutors, at the, take pledge to provide full satisfaction and assurance in Finance help via online tutoring. Students are getting 100% satisfaction by online tutors across the globe. Here you can get homework help for Finance, project ideas and tutorials. We provide email based Finance help. You can join us to ask queries 24x7 with live, experienced and qualified online tutors specialized in Finance. Through Online Tutoring, you would be able to complete your homework or assignments at your home. Tutors at the TutorsGlobe are committed to provide the best quality online tutoring assistance for Finance Homework help and assignment help services. They use their experience, as they have solved thousands of the Finance assignments, which may help you to solve your complex issues of Finance. TutorsGlobe assure for the best quality compliance to your homework. Compromise with quality is not in our dictionary. If we feel that we are not able to provide the homework help as per the deadline or given instruction by the student, we refund the money of the student without any delay.