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Working capital
While making the statement of estimation of working capital the Debtors should be taken on total cost or selling price?
Replies (3)
Working capital = current Assets - current liabilities. As Debtors are covered under current assets, debtors should be taken while calculating working cap.
Yeah but on cost or selling price? (If units are given)
Hey Nidhi,
As per the definition of Receivables, it is an asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they include all debts owed to the company.
And the company takes debtors as total amount owed to the company i.e cost plus profit.
So you have to take it on selling price so as to calculate working capital.
Cheers
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