Working capital: Difference between revisions
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imported>Doug Williamson (Add link.) |
imported>Doug Williamson (Expand.) |
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In simple terms, it can be calculated as: | In very simple terms, it can be calculated as: | ||
Stock | Stock | ||
ADD Trade debtors | ADD: Trade debtors | ||
LESS (Trade creditors) | LESS: (Trade creditors) | ||
= Working capital | = Working capital | ||
Revision as of 22:42, 5 August 2016
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 very 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.
