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Cash and Bank Balances

Cash and Bank Balances Apart from WC needs for financing inventories and debtors, firms also find it useful to have some minimum cash balances with them. It is difficult to lay down the exact procedure of determining such an amount. This would primarily is based on...

COMPUTATION OF WORKING CAPITAL

COMPUTATION OF WORKING CAPITAL The two components of working capital (WC) are current assets (CA) and current liabilities. They have a bearing on the cash operating cycle. In order to calculate the working capital what is required is the holding period of various...

Operating Efficiency

Operating Efficiency The operating efficiency of the magnificence is above an important determinant of the level of working capital. The management can contribute to a sound working capital position through operating efficiency. Although the management cannot control...

Price Level Changes

Price Level Changes Changes in the price level also affect the requirements of working capital. Rising prices the use of more funds for maintaining an existing level or activity. For the same level of current assets, higher cash outlays are required. The effect of...

Depreciation Policy

Depreciation Policy Depreciation policy also exerts an influence on the quantum of working capital. Depreciation charges do not involve any cash outflows, The effect of depreciation policy on working capital is, therefore, indirect. In the first place, depreciation...