What does working capital means

Question

Accepted Answer

Working capital refers to the funds available for a company's day-to-day operations and is calculated by subtracting current liabilities from current assets.

Working capital is the measure of a company's liquidity and ability to meet short-term obligations.
It represents the difference between a company's current assets (cash, accounts receivable, inventory) and current liabilities (accounts payable, short-term debt).
Positive working capital indicates that a company has enough assets to cover its short-term liabilities, while negative working capital suggests a potential liquidity problem.
Working capital management involves optimizing the balance between current assets and liabilities to ensure smooth operations and financial stability.
For example, if a company has $500,000 in current assets and $300,000 in current liabilities, its working capital would be $200,000.

Accepted Answer

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Accepted Answer

Depends upon what the HR knows about working capital. Ppl know about working capital ratio as current ratio but various businesses have various working capital needs like

Gross working capital = Current assets

Net working capital = Current assets - Current liabilities

Fixed working capital = ??

Temporary working capital = Net working capital - Fixed or Permanent working capital.

Seasonal working capital = Fixed working capital + Additional working capital needs.

Regular working capital = ??

There are different methods to assess working capital needs like

a. % of sales method = Networking capital / Revenue *100

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Accepted Answer

Working capital is the amount is required to financing the day to day operations of organisations .In accounting term it is the difference between current assets and current liabilities.

What does working capital means

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