Working capital: Difference between revisions
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imported>Doug Williamson (Expand page to align with qualifications material.) |
imported>Doug Williamson (Add formula.) |
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It represents the day to day capital requirement to continue the operations of the organisation. | It represents the day to day capital requirement to continue the operations of the organisation. | ||
In simple terms, it can be calculated as: | |||
Stock | |||
ADD Trade debtors | |||
LESS (Trade creditors) | |||
= Working capital | |||
This working capital requirement has to be financed by borrowings, shareholders' funds, or a combination of both of them. | This working capital requirement has to be financed by borrowings, shareholders' funds, or a combination of both of them. | ||
Revision as of 10:53, 9 October 2015
Working capital is normally defined as the excess of current assets over current liabilities.
It represents the day to day capital requirement to continue the operations of the organisation.
In simple terms, it can be calculated as:
Stock
ADD Trade debtors
LESS (Trade creditors)
= Working capital
This working capital requirement has to be financed by borrowings, shareholders' funds, or a combination of both of them.
