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

What is the matching principle of working capital financing, What is the ma...

What is the matching principle of working capital financing?  What are the benefits of following this principle? The matching principle is while short-term financing is used fo

Callable bonds and puttable bonds, Convertible bonds can be classified into...

Convertible bonds can be classified into different types such as callable bonds and puttable bonds. These bonds are discussed as follows: Basics of Callable Bonds A callabl

Financial management, Suggestion Regarding Credit Limit Should It Be Approv...

Suggestion Regarding Credit Limit Should It Be Approved Or Not What Should Be The Ammount Of Credit Limit That Electronics Give To Booth Plastics

Distinguish between a promissory note and a bill of exchange, QUESTION ...

QUESTION (a) "A promissory note is an instrument in writing (not being a blank or a currency note) containing an unconditional undertaking, signed by the maker, to pay a certai

Call risk, We have seen earlier that there are callable bonds. This i...

We have seen earlier that there are callable bonds. This is a valuable feature for the issuers who consider that their stock is undervalued enough so that selling

Expalin purchase outright and leaminger plc, LEAMINGER PLC (a) Purchas...

LEAMINGER PLC (a) Purchase outright (2) Balancing allowance Tax effect = 93,906 × 30% = 28,172 Finance lease Annuity Factor (AF) at 10% for 4 year

Discuss the importance of dividend decisions, 1.   Discuss the various tech...

1.   Discuss the various techniques of inventory management for efficient working capital management. 2.   Discuss the importance of dividend decisions. What is MM theory of div

Stream of expected returns, Stream of Expected Returns Investment retur...

Stream of Expected Returns Investment returns can take many forms. An investor must consider all these forms to evaluate an investment option accurately. A brief description of

Preferred stock, Preferred Stock This is a category of capital stock th...

Preferred Stock This is a category of capital stock that will gives its holders preference  over common stockholders in the distribution  of earnings  or rights to the assets o

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