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What is Working Capital?
Working capital means the funds essential to be devoted in the business for a short period usually up to one year. Working capital can be also said short-time capital or circulating capital.
Why working capital is called by the name circulating or revolving capital?
Because of the continuous process of investing and realizing working capital is called circulating and sometimes revolving capital. Funds which are invested in current assets are continuously recovered through realization of cash and it is again reinvested in current assets. It is a process of cash to current asset and back to cash and so on.
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Why working capital is needed?
Working capital is essential to meet day to day operating expenses and for holding stocks of raw-materials, consumables, work in progress, spare parts, finished goods and debtors balances also bills receivable. Working capital is needed-
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Difference between Permanent and Temporary Working Capital-
There are more such differences between these working capitals. We have the best team of experts who are experienced in writing for years. We also clear explanation to this by using diagrams and figures like the levels of working capital in case of a stable firm and in case of a growing firm.
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