Permanent working capital

Others 714 views 1 replies

Please clarify if Term loans from banks or financial institutions form part of working capital requirement.

 

Thanks in advance.

Replies (1)

IF THESE TERM LOANS ARE TAKEN FOR SMALL PERIOD, SAY PAYABLE WITHIN ONE YEAR THAN THEY WILLBECOME THE PART OF CURRENT LIABILITY AND IT WOULD BE DEDUCTED FROM CURRENT ASSETS WHILE CALCULATING WORKING CAPITAL REQUIREMENTS . IF THIS TERM LOAN IS FOR LONG PERIOD, SAY PAYABLE AFTER ONE YEAR THAN IT WILL BE THE PART OF LONG TERM LIABILITY AND THEN IT WOULD NOT BE THE PART OF WORKING CAPITAL REQUIREMENTS BEACSUSE IT WOULD NOT BE AVAILABLE FOR FINANCING THE CURRENT ASSETS.


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