ICICI

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

Accounting doubt for capital

kollipara sundaraiah (B.com) (1600 Points)

24 October 2021  
difference between fixed capital and working capital and circulate capital.

 5 Replies

yasaswi gomes (My grammar is 💯 good I)   (6646 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)   (6646 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)   (6646 Points)
Replied 24 October 2021

Forgot there is miller orr method of cash management

Cash budget to get working capital bank loans.

prasad Nilugal (Sr . Accountant and GST Practitioner . )   (7054 Points)
Replied 25 October 2021

1) Fixed Capital - Equity share capital , preference share capital Etc .

2) Working Capital - Current Assets less Current liability .

3) Circulating Capital is equivalent to working capital .

yasaswi gomes (My grammar is 💯 good I)   (6646 Points)
Replied 25 October 2021

Technically Capital= assets- liabilities, however, Fd is like investment capital. 


Leave a reply

Your are not logged in . Please login to post replies

Click here to Login / Register  





Subscribe to the latest topics :
Search Forum:

Trending Tags