which capital is known as working capital
Answers
Answered by
0
Explanation:
The capital that is required for operating business, organisation or other entity, including governmental entities, or the capital that is used in day-to-day trading operations, which is calculated as the current assets minus the current liabilities, is known as working capital.
Answered by
0
" ![\ \ \ \large \cal{ \pmb{ \colorbox{darkblue}{W ORKING \: \: \: \: CAPITAL}}}\ \ \](https://tex.z-dn.net/?f=+%5C+%5C+%5C+%5Clarge+%5Ccal%7B+%5Cpmb%7B+%5Ccolorbox%7Bdarkblue%7D%7BW+ORKING+%5C%3A+%5C%3A+%5C%3A+%5C%3A+CAPITAL%7D%7D%7D%5C+%5C+%5C+ "\ \ \ \large \cal{ \pmb{ \colorbox{darkblue}{W ORKING \: \: \: \: CAPITAL}}}\ \ \")
"
WORKING CAPITAL is defined as the funds which are used in the day to day business operations of a company.
The efficient management of working capital is important for both, the profitability and the financial health of the company.
In layman’s term, every company needs a cash reserve to manage their daily running cost and that is known as the Working Capital.
Working capital is calculated as:
Working Capital = Current Assets - Current Liabilities
- Current Assets → Inventory, cash, and account receivables
- Current Liabilities → Account Payables And Short Term Loans
Similar questions