Working cap
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Working cap Working cap Presentation Transcript

  • PRESENTED BY:- RAVINDRA SINGH SUSHIL SHARMA
  • LEARNING OBJECTIVES  INTRODUCTION OF WORKING CAPITAL  DEFINITION  FORMULA  ILLUSTRATION  CYCLIC DIAGRAM OF WORKING CAPITAL  CONCLUSION
  •  In general, companies that have a lot of money will be successful since they can expand and improve their operations. more  Along with fixed assets such as plant and equipment, cash is considered a part of operating capital.  It is calculated as current assets minus current liabilities.  If current assets are less than current liabilities, an entity has a working capital deficiency, also called a Working capital deficit.
  • Working capital is money available to a company for dayto-day operations.  Working capital measures how much in liquid assets a company has available to build its business.
  • FORMULA working capital Current Assets
  • How It Works/Example: Here is some balance sheet information about XYZ Company: BALANCE SHEET FOR COMPANY XYZ Rs. LIABILITIES ASSETS Rs. ACCOUNT PAYABLE 30,000 CASH 60,000 ACCRUED EXPENCES 20,000 MARKETABLE SECURITIES 10,000 BILLS PAYABLE 5000 ACCOUNT RECEIVABLE 40,000 CURRENT PORTION LONG-TERM DEBTS 10,000 INVENTORY 50,000 TOTAL CURRENT LIABILITIES 65,000 TOTAL CURRENT ASSETS 1,60,000 Using the working capital formula and the information above from we can calculate that XYZ Company's working capital is: Rs.160,000 – Rs.65,000 = Rs.95,000
  • Operating Cycle Of Working Capital 1. CASH 5. ACCOUNT RECEIVED (Debtor, B/R) 4. FINISHED GOODS 2. RAW MATERIAL 3. WORK IN PROGRESS
  •  Gross Working Capital = Total Current Assets  Net Working Capital = Excess of Current Assets over Current Liabilities  Working Capital Deficit = Excess of Current Liabilities over Current Assets.  Working Capital = Current Assets - Current Liabilities