FINANCE

1. WORKING CAPITAL MANAGEMENT –
vedapradha.r

2. Capital
Fixed Working

3. Gross working
capital
Net working capital

4. Working capital: It refers to the funds that are
required by a business firm to meet its short
term requirements in the form of operational
expenses.
Gross working capital: It is the capital invested on
the total current assets of a business concern.
Net working capital: It is the excess of current
assets over current liabilities or difference
between CA and CL.

5. Working
capital
components
Current Assets
Current
liabilities

6. Cash in hand
Cash at bank
Bills receivables
Debtors
Inventories
Short term loans and advances
Accrued income
Prepaid expenses

7. Bills payable
Creditors
Short term loans & advances
Bank overdraft
Outstanding expenses
Provision for taxation
Dividend payable

8. Purchase of raw materials
Payments of wages and
salaries
Operational daily
expenses
Provide credit obligations

9.  Nature of business
 Size of business
 Production cycle
 Manufacturing process
 Earning of firm
 Dividend policy
 Business cycle
 Credit policy
 Growth & expansion
 Availability of raw materials

11. Accumulation of raw
materials, spares
Locking of funds
Creates bad debts
Reduces collection period
Fall in profits

12. Buy materials in bulk
Tough in planning
Inefficient usage of fixed
assets
Rate of return on
investments falls
Overall operation of
business decreases

13. Internal
• Retained
earnings
• Reserves &
surplus
• Depreciation
funds
External
• Shares
• Debentures
• Loans from FI
• Financial
arrangements
• Public
deposits