Effect on Working Capital
This query is : Resolved
Guest
Guest
(Querist)
17 December 2009
Does provision for doubtful debts and provision for discount on debtors has any effect on working capital? If yes, can u plz explain how it affects?
Thank you
Thank you
17 December 2009
If you have not made the provision, then the Debtors would include an amount which is not recoverable. Such debtors artificially keep your working capital requirements at a higher level.
Once a provision has been made and the debtors' reduced to that extent, the actual picture gets reflected in your working capital cycle.
Once a provision has been made and the debtors' reduced to that extent, the actual picture gets reflected in your working capital cycle.
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