Sunday, March 27, 2016

Working Capital

Working capital is the amount of money that circulates within a business which is used for payment of day to day expenses and short term debts.


Image result for working capital cycle
The Working Capital Cycle

Reasons for shortage of working capital

  • Purchase of unnecessary fixed assets
  • Overestimation of sales
  • Underestimation of expense
  • A decrease in demand due to seasonal factors
  • Losing control over debtors resulting in bad debts
  • Changes in economic condition

Methods of improving working capital

  • Reducing credit sales and increasing credit purchase
  • Taking short term loan from banks such as overdraft
  • Selling unutilized fixed assets
  • Collecting money from debtors at a faster rate

1 comment:

  1. These days it is hard to get home loans. Either its home equity loan or its mortgage loan and availability of easy home equity loans is in full bloom. These loans are uncomplicated, tenable, easily available, very flexible and tailor-made for homeowners. The best part about all this is that almost every loan lending or financial institution offers loans at high rate but Mr Pedro offers low loan rate @ 2% rate in return of such Business loan,Personal Loan, Home Loan, Car Loan.
    You can contact Mr Pedro on pedroloanss@gmail.com

    ReplyDelete

Featured Post

Boston Matrix