Question

Explain the concepts of working capital with the help of an example.

Answer 1

Answer:

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Generally, working capital refers to the current assets of a company that are changed from one form to another in the ordinary course of business, i.e. from cash to inventory, inventory to work in progress (WIP), WIP to finished goods, finished goods to receivables and from receivables to cash.

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Answer 2

Answer:

: The net working capital is an accounting concept which represents the excess of current assets over current liabilities.