STATEMENT OF CHANGES IN FINANCIAL POSITION (SCFP): WORKING CAPITAL BASIS

The net working capital of a firm is the amount by which its current assets (CA) exceed its current liabilities. (CL). The magnitude of working capital is a measure of the safety margin that exists for the protection of short-term creditors. Working capital may also be viewed as funds available for acquisition of, non-current assets/fixed assets as well as to repay non-current liabilities long-term liabilities. Any transaction that result in an increase in working capital is any transaction that causes, a decrease in WC is an application of we, Some transactions merely change the form of working capital, without altering the amount of working capital; such items neither constitute a source nor the use of working capital.

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