3. WHAT IS WORKING CAPITAL???
According to Genestenberg , “ Circulating capital means current assets of a
company that are changed in the ordinary course of business from one
form to another , as for example , from cash to inventories , inventories to
receivables , receivables to cash.”
Working capital refers to that part of firm’s capital which is required for
financing short term or current assets such as cash , marketable securities ,
debtors and inventories..
Working capital also known as revolving or circulating or short term capital..
4. MANAGEMENT OF WORKING CAPITAL
It refers to all aspects of administration of both current assets and current
liabilities .
The basic goal of working capital management is to manage the current
assets and current liabilities of a firm .
That is neither excessive nor inadequate
Working capital management policies of a firm have great effect on it’s
profitability , liquidity , structural health of the organization.
5. Contd…..
• In this context working capital management is three dimensional in nature:
1. Dimension i - profitability , risk and liquidity
2. Dimension ii - composition and level of current assets
3. Dimension iii- composition and level of current liabilities