02-09-2017, 12:24 PM
In an ordinary sense, working capital denotes the amount of funds needed to meet the day-to-day operations of a concern. This is related to short-term assets and sources of short-term financing. Hence, both assets and liabilities - in the sense of managing working capital - are the excess of current assets over current liabilities.
Funds invested in current assets are called working capital. It is the background that is needed to execute day-to-day operations. It circulates in business as blood circulates in a living body. Generally, working capital refers to the current assets of a company that are changed from one form to another in the ordinary course of the activity, ie from cash to inventory, inventory to work in progress (WIP), WIP to finished products, finished products to accounts receivable and accounts receivable to cash.
Funds invested in current assets are called working capital. It is the background that is needed to execute day-to-day operations. It circulates in business as blood circulates in a living body. Generally, working capital refers to the current assets of a company that are changed from one form to another in the ordinary course of the activity, ie from cash to inventory, inventory to work in progress (WIP), WIP to finished products, finished products to accounts receivable and accounts receivable to cash.