Explain the concept of working capital what are the factors which influence the working capital

Working capital management and profitability of manufacturing and construction firms in kenya in this context, the objective of the current study is to provide empirical evidences about the effect of working. Fixed capital is a concept in economics and accounting, first theoretically analyzed in some depth by the economist david ricardoit refers to any kind of real or physical capital (fixed asset) that is not used up in the production of a product. The working capital requirement is determined by a large number of factors but, in general, the following factors influence the working capital needs of an enterprise:za (1) nature of business :- working capital requirements of an enterprise are largely influenced by the nature of its business. Working capital is as important to a business as blood is to a human being technically, this capital measurement represents your company's current assets minus its current liabilities. There are at least a couple of different definitions of working capital that i am aware of in one definition, working capital is a measure of how efficiently a company is working and how healthy.

Working capital is the excess of current assets that has been supplied by the long-term creditors and the stockholders12 the two concepts of working capital, gross working capital and net working capital are exclusive both are equally important for the efficient management of working capital. The concept of human capital usually accumulated through working but human-unrelated factors can more influence an individual‟s income in. Explored the idea that level of working capital selected by the firm depends on the firm-specific factors such as capital intensity, profitability, and size of the firm etc ultimate objective of the firms is to. Working capital and profitability of the firm, bradley and michal rubach (2002) on trade credit and small business failures suggested that there is a relationship between poor working capital management and.

Working capital: a company's sum of all current assets minus a company's sum of all current liabilities equals its working capital essentially, what are we calling working capital it is the owners' equity, part of the fundamental accounting equation, except that it is the cash flow retained within a company. Therefore, working capital management is a key factor in the company's long-term success: without the 'oil' of working capital, the 'engine' of non-current assets will not function. Wacc analysis can be looked at from two angles - the investor and the company from the company's angle, it can be defined as the blended cost of capital which the company has to pay for using the capital of both owners and debt holders.

The concept of negative working capital on a company's balance sheet might seem like a strange one but it's something you are going to encounter as an investor many, many times over your lifetime, especially when analyzing certain sectors and industries. A brief description of the general factors influencing working capital needs of a firm are as follows: 1 nature of business: the amount of working capital is basically related to the nature of business. The factors discussed above influence the quantum of working capital in the business the assessment of working capital requirement is made keeping these factors in view each constituent of working capital retains its form for a certain period and that holding period is determined by the factors discussed above. Verma et al (2009) observed for achieve the firms are focusing even more on effective financial management practices and are greatly concerned about core financial issues like capital structure, cost of capital, working capital management and capital budgeting. 2 101 working capital working capital is the capital available for conducting the day-to-day operations of the business and consists of current assets and current liabilities.

Working capital cycle when the working capital cycle of a firm is long, it will require larger amount of working capital but, if working capital cycle is short, it will need less working capital 11. Working capital is the amount of fund which is converted in current assets of a business a firm needs capital to pay for its current expenses such as payment to employees, raw martial, bills gas, electricity and cash in hands. The capital structure of a firm is highly influenced by the growth and stability of its sales if the sales of a firm are expected to remain fairly stable, it can raise a higher level of debt. Capital budgeting usually involves calculation of each project's future accounting profit by period, the cash flow by period, the present value of cash flows after considering time value of money, the number of years it takes for a project's cash flow to pay back the initial cash investment, an assessment of risk, and various other factors. Capital adequacy ratios are a measure of the amount of a bank's capital expressed as a percentage of its risk weighted credit exposures an international standard which recommends minimum capital adequacy ratios has been.

Explain the concept of working capital what are the factors which influence the working capital

explain the concept of working capital what are the factors which influence the working capital Internal and external factors that affect working capital in any business, managing working capital is a never-ending task for the finance and accounting personnel a constant inflow of funds has to be ensured to keep the daily operations of the company motoring along smoothly.

A business will typically need working capital when its operating cycle is too long first, let's define what an operating cycle is in a business the operating cycle is the average period of time required for a business to make an initial outlay of cash to produce goods, sell the goods, and receive cash from customers in exchange for the goods. Logistics cost analysis 95 the concept of total cost analysis 96 fixed capital and working capital and so there are financial issues to be seen how logistics. Working capital cycle cash flows in a cycle into, around and out of a business it is the business's life blood and every manager's primary task is to help keep it flowing and to use the cashflow to generate profits. The factors considered in the rating process are the ability of the corporation to pay the interest and debt obligation, its size, its debt to equity ratio, its ratings of existing bonds, the working capital position etc.

  • (mansoori and muhammad, 2012)determining the important factors affecting working capital management would affect level of investment in current assets as well as the appropriate sources to financing them.
  • The concept of management of the working capital refers to the managers' skills in handling short term investments and the aim of capital management is to increase the liquidity, profitability and the value of shareholders (nilsson, et al.
  • Factors determining working capital requirements the quantum of working capital is depending upon a large number of factors it is very difficult to pin point the factor which is highly responsible.

The working capital needs of an enterprise are influenced by numerous factors these are nature of business, size of the enterprise, seasonality of operations, production policy.

explain the concept of working capital what are the factors which influence the working capital Internal and external factors that affect working capital in any business, managing working capital is a never-ending task for the finance and accounting personnel a constant inflow of funds has to be ensured to keep the daily operations of the company motoring along smoothly. explain the concept of working capital what are the factors which influence the working capital Internal and external factors that affect working capital in any business, managing working capital is a never-ending task for the finance and accounting personnel a constant inflow of funds has to be ensured to keep the daily operations of the company motoring along smoothly.
Explain the concept of working capital what are the factors which influence the working capital
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