SUMMARY
Working capital refers to the current assets. When the term, net working capital is used, it specifically means current assets less current liabilities. Again, that part of working capital which is maintained throughout the year is known as permanent working capital. The other part that fluctuates at different periods during the year is known as variable working capital.
The management of working capital involves two major issues. One is related to the size of current assets. The size of the current assets is ascertained on the basis of the operating cycle, yet it is optimised through a trade-off between maintenance of liquidity and profitability. However, the size often varies from that which is optimal, depending upon the psyche of ...
Get Fundamentals of Financial Management, Third Edition now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
