Accounting doubt for capital
kollipara sundaraiah (B.com) (2887 Points)
24 October 2021
difference between fixed capital and working capital and circulate capital.
kollipara sundaraiah (B.com) (2887 Points)
24 October 2021
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 24 October 2021
Fixed capital= Investments in FD's, securities, shares etc
Working capital = current cash requirements to meet the cash operating cycle.
Circulating cash= can be cash in hand or petty cash or small loans and advances given to others.
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 24 October 2021
To make your understanding better, working capital is vast
You have to find out Net working capital using the percentage of sales method to budget how much cash you need for operations.
You have factoring facility to reduce receivable days
Your formula is like current assets - current liabilities which will give current balance
Working capital bank loans have different methods to get a loan like tandon method, turnover method or permissable method Etc for funding
Cash can be managed by investing in securities using EOQ / Baumols cash model where they sell securities to meet the cash levels.
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 24 October 2021
Forgot there is miller orr method of cash management
Cash budget to get working capital bank loans.
prasad Nilugal
( GST Practitioner & Accounts )
(14153 Points)
Replied 25 October 2021
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 25 October 2021
Technically Capital= assets- liabilities, however, Fd is like investment capital.
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