Working capital positive negative effects
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Working Capital
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Working capital positive negative effects..meaning example application..Easy explanation
Transcript of Working capital positive negative effects
Working Capital
Working Capital
Gross Working Capital
Net
Working
Capital
• The .
• Liquid funds available to a business and any assets that are anticipated will be exchanged for cash within a one year period.
Gross Working Capital
• The term net working capital refers to the difference between the current assets and current liabilities.Net
Working Capital
Adequate supply of raw materials
Cash to pay for wages, power and other costs
Creating a stock of finished good
The ability to grant credit to its customers
Obtaining discounts
WORKING CAPITAL
Cash crisis may emerge due to scarcity of working funds
Optimum capacity utilization of fixed assets may not be achieved due to non-availability
of the working capital
The business may fail to honor its commitment in time, thereby adversely
affecting its credibilityNon-availability of stocks due to non-availability of funds may resultin production stoppage
WORKING CAPITAL
• Excess of working capital may result in unnecessary accumulation of inventories
• It may lead to offer too liberal credit terms to buyers and very poor recovery system and cash management
• Over-investment in working capital makes capital less productive and may reduce return on investment
