Float neutral and Working capital: Difference between pages

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.

@@ Line 1: / Line 1: @@
-''Cash management''
+Working capital is normally defined as the excess of current assets over current liabilities.
-'Float neutral' terms - negotiated by a customer with their supplier - means electronic disbursement on the same day as value would have been lost had the payment been made by cheque.
+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.
 == See also ==
-* [[Disbursement]]
+* [[Capital]]
+* [[Cash flow statement]]
+* [[Efficiency ratio]]
+* [[Liquidity management]]
+* [[Over trading]]
+* [[Supply chain finance]]
+* [[Working capital management]]