Working capital: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson (Expand.) |
imported>Doug Williamson (Add note about negative working capital in food retailing.) |
||
| Line 16: | Line 16: | ||
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. | ||
Working capital can be negative, for example in food retailing. | |||
Revision as of 11:20, 10 February 2017
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.
Working capital can be negative, for example in food retailing.
