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    Working Capital Introduction

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    Ajeet Kumar
    Working capital refers to the short-term funds that a company uses to finance its day-to-day operations, including current assets such as cash, inventory, and receivables. It is also known as circulating or revolving capital. There are two measures of working capital: gross working capital, which is total current assets, and net working capital, which is current assets minus current liabilities. Corporate executives devote significant attention to managing a company's working capital to ensure it has enough short-term funds to operate smoothly.

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    Working Capital Introduction

    Uploaded by

    Ajeet Kumar
    13 views1 page
    Working capital refers to the short-term funds that a company uses to finance its day-to-day operations, including current assets such as cash, inventory, and receivables. It is also known as circulating or revolving capital. There are two measures of working capital: gross working capital, which is total current assets, and net working capital, which is current assets minus current liabilities. Corporate executives devote significant attention to managing a company's working capital to ensure it has enough short-term funds to operate smoothly.

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    Working capital refers to the short-term funds that a company uses to finance its day-to-day operations, including current assets such as cash, inventory, and receivables. It is also known as circulating or revolving capital. There are two measures of working capital: gross working capital, which is total current assets, and net working capital, which is current assets minus current liabilities. Corporate executives devote significant attention to managing a company's working capital to ensure it has enough short-term funds to operate smoothly.

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    13 views1 page

    Working Capital Introduction

    Uploaded by

    Ajeet Kumar
    Working capital refers to the short-term funds that a company uses to finance its day-to-day operations, including current assets such as cash, inventory, and receivables. It is also known as circulating or revolving capital. There are two measures of working capital: gross working capital, which is total current assets, and net working capital, which is current assets minus current liabilities. Corporate executives devote significant attention to managing a company's working capital to ensure it has enough short-term funds to operate smoothly.

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    Working capital Introduction:-

    • Working capital typically means the firm’s holding of current or short-term assets such as
    cash, receivables, inventory and marketable securities.

    • These items are also referred to as circulating capital

    • Corporate executives devote a considerable amount of attention to the management of


    working capital.

    Definition of Working Capital:-

    Working Capital refers to that part of the firm’s capital, which is required for financing short-
    term or current assets such a cash marketable securities, debtors and inventories. Funds thus,
    invested in current assets keep revolving fast and are constantly converted into cash and this cash
    flow out again in exchange for other current assets. Working Capital is also known as revolving
    or circulating capital or short-term capital.

     Gross working capital:

    Total current assets.

     Net working capital:

    Current assets - Current liabilities.

     Net operating working capital (NOWC):

    Operating CA – Operating CL =

    (Cash + Inv. + A/R) – (Accruals + A/P)

    Concept of working capital:-


    There are two possible interpretations of working capital concept:

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