What do you mean by variable working capital, Financial Management

Assignment Help:

Q. What do you mean by Variable working capital?

Permanent or fixed: Permanent or fixed working capital is the minimum amount which is required to ensure effective utilization of the fixed facilities and for maintaining the circulation of the current assets . there is always a minimum level of the current assets ,which is continuous required by the enterprises to carry out the normal operation of the business . for example every firm is require to maintain a minimum level of the raw material , WIP and the finish goods and the cash balance . the minimum level of the current assets is called permanent or fixed working capital as this part is permanent is booked in the current assets . as the business grow the requirement o the permanent working capital is also increase due to increase in the current assets the permanent working capital can further b classified as regular working capital or reverse working capital require the circulation of the current assets from cash to inventory from inventory to receivable and receivable to cash reserve working capital is the excess amount over the requirement for regular working capital which may Be provided for the contingency that may arise at unstated period such as a strike , rise in the prise , depression , etc.


Related Discussions:- What do you mean by variable working capital

Capital budegting, SCL Limited a highly profitable company is engaged in th...

SCL Limited a highly profitable company is engaged in the manufacture of power intensive products.

How does the net present value relate to value of the firm, How does the ne...

How does the net present value relate to the value of the firm? The net present value is the dollar amount of the amend to the value of the firm if the project under considerat

Find the expected dividend - stocks, You are considering the purchase of so...

You are considering the purchase of some shares of PECO Inc. common stock which paid a dividend of $1.50 today. You expect the dividend to grow at the rate of 7% per year for the n

Significance of secondary markets, Significance of Secondary Markets: H...

Significance of Secondary Markets: High liquidity and constant demand in the market need a diversified investor base with different preferences of demand, maturity and risk. Ap

Firms indifference point, help me withh the calculation concept of the poin...

help me withh the calculation concept of the point where the firm is indifferent

Fundamentals of structured product engineering, Fundamentals of Structured ...

Fundamentals of Structured Product Engineering 1. (a) Let r m denote the m month swap rate (or Libor rate). Subsequently the 3 × n month forward rate f (3 ×n )

91-day t-bills, 91-Day T-Bills Starting from July, 1965, 91-day T-bills...

91-Day T-Bills Starting from July, 1965, 91-day T-bills were issued at a discount rate ranging from 2.5-4.6 percent per annum. Till July, 1974, the discount rate was 4.6 percen

Cost of capital, ABC Ltd. Produces electronic components with a selling pri...

ABC Ltd. Produces electronic components with a selling price per of Rs.100. Fixed cost amount to Rs.2,00,000/- 5000 units are produced and sold each year. Annual profits amount to

Relationship b/w bond''s market price and yield to maturity, What is the re...

What is the relationship between a bond's market price and its promised yield to maturity?  Explain. A bond's market price reckon on its yield to maturity (YTM).  When a bond h

Show company monetary statements, It is true that company monetary statemen...

It is true that company monetary statements will often consist of narrative information about staff as a key resource. However, under accounting regulation this resource is not sho

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd