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Question
Which capital is known as working capital?
Which capital is known as working capital?
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Answer:
Working capital is the indicator that calculates the company’s economic soundness and functional performance. It is the product of current assets minus current liabilities because current assets are assets that can be converted into cash within 1 year, notably cash, investors, inventories, and so on., while current liabilities are those which decrease outstanding payments in 1 year, notably short term loans, bank overdraft, creditors, tax provisions and so on.
Answer:
Working capital is the indicator that calculates the company’s economic soundness and functional performance. It is the product of current assets minus current liabilities because current assets are assets that can be converted into cash within 1 year, notably cash, investors, inventories, and so on., while current liabilities are those which decrease outstanding payments in 1 year, notably short term loans, bank overdraft, creditors, tax provisions and so on.
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