Working capital: Difference between revisions
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imported>Doug Williamson (Change "commonly" to "normally". Add headings. Consequential minor wording changes.) |
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== The normal definition of working capital == | |||
Working capital is normally defined as the excess of current assets over current liabilities. | |||
This working capital requirement for a company has to be financed by borrowings, shareholders' funds, or a combination of both of them. | This working capital requirement for a company has to be financed by borrowings, shareholders' funds, or a combination of both of them. | ||
== An alternative broader measure of working capital == | |||
Some practitioners have defined 'working capital' more widely, to include fixed assets (in addition to the other working capital items included in the normal - and narrower - definition above). | |||
This - more broadly defined - working capital requirement similarly has to be financed by borrowings, shareholders' funds, or a combination of both of them. | This - more broadly defined - working capital requirement similarly has to be financed by borrowings, shareholders' funds, or a combination of both of them. | ||
== See also == | == See also == | ||
Revision as of 09:32, 27 August 2013
The normal definition of working capital
Working capital is normally defined as the excess of current assets over current liabilities.
This working capital requirement for a company has to be financed by borrowings, shareholders' funds, or a combination of both of them.
An alternative broader measure of working capital
Some practitioners have defined 'working capital' more widely, to include fixed assets (in addition to the other working capital items included in the normal - and narrower - definition above).
This - more broadly defined - working capital requirement similarly has to be financed by borrowings, shareholders' funds, or a combination of both of them.
