what is the definition of working capital ?

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maheshwar

maheshwar (Querist)
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16 October 2007 working capital

R. BALAKRISHNAN

R. BALAKRISHNAN (Expert)
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16 October 2007 'Working Capital' means operating capital. It is the part of the total capital which requires for running the day to day operations of the business. It is not fixed capital. Fixed Capital means investments in Fixed Assets like Land, Building, Machinery etc. which is long term investment in nature. Working Capital is short term in nature, i.e. stock of raw materials, semi finished goods, finished goods, trade debtors, cash and bank balances. The amount of working capital will vary from time to time depending the speed of the business done. The Accounting Term of the working capital is Current Assets.

CMA Gul S

CMA Gul S (Expert)
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16 October 2007 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. Companies with negative working capital may lack the funds necessary for growth. also called net current assets or current capital.

Sandeep Diwan

Sandeep Diwan (Expert)
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16 October 2007 Working capital is fund requirement for day to day need of the company.The requirement of WC depends upon the level of activity during the period.importance of Working capial for a company is same as importance of blood in humen body.Working capital has two concepts Gross concept and net concept. As per the Gross concept working capital is total of current asset and as per the net concept it is net off current liability.Operating cycle is one of the major factor effecting the level of wotrking capital requirement for the company. working capital level should be adequate as both excessive and inadequate level of working capital are dangeroues for the company.

kumar arumugam

kumar arumugam (Expert)
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31 October 2007 working capital is the capital in force in day today running. that is current assets less current liability. for any healthy enterprise, it should always be in positive.

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