Answer in brife

Question

Write a short note on Working Capital.

Vidyadip · Accepted Answer

There are two concepts related to working capital:

Gross Working Capital – The sum total of all current assets of a business concern is termed as Gross Working Capital.
Net Working Capital = Current Assets – Current Liabilities.
It is the fund that is needed to run the day-to-day operations.
It is used to purchase raw materials, payment of wages and expenses, and payment of dividends and interest to the investors.
Working Capital enhances liquidity, solvency, creditworthiness, and reputation of the enterprise.
Working Capital is needed for the efficient use of fixed assets.
Working capital provides necessary funds to meet unforeseen contingencies and thus helps the enterprise run successfully during a crisis.
It is also called “Circulating Capital”.

Answer