Working Capital

1. Working Capital
2. How to calculate working capital
3. Need of working capital
4. Operating Cycle
5. Classification of working capital
6. Determinants of working capital
7. Importance of working capital
8. Advantages of adequate working capital
9. Disadvantages of excessive working capital
10. Estimation of working capital need

1. PRESENTED BY : SALONI AGARWAL MBA 2.2 ROLL NO. 26

2. Working capital is a measure of a company's liquidity, operational efficiency, and its short-term financial health.

3. NEED OF WORKING CAPITAL Maintaining an appropriate level of working capital resources to ensure operational and growth aspects. Augmentation of profit by ensuring that the investment in working capital is kept at the minimal level.

4. DETERMINANTS OF WORKING CAPITAL Nature of business Nature of demand Production policy Credit policy Dividend policy Working capital cycle Manufacturing cycle Business period Price level changes Effect of external business environmental factors

5. ADVANTAGES OF ADEQUATE WORKING CAPITAL Cash discount Creates a feeling of security and confidence Maintenance of solvency and continuation of production Sound goodwill Easy loans from the banks Exploitation of good opportunity

6. DISADVANTAGES OF EXCESSIVE WORKING CAPITAL Excessive investment in fixed assets Careless purchase of materials Speculative tendencies Liberal credit Carelessness regarding costs

7. ESTIMATION OF WORKING CAPITAL NEED Working capital as a percentage of net sales Working capital as a percentage of total assets or fixed assets Projected balance sheet method Adjusted profit and loss method Working capital based on operating cycle