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

Which type of financing is appropriate to firm, This case provides the oppo...

This case provides the opportunity to match financing alternatives with the needs of different companies. It allows the reader to demonstrate a familiarity with different types of

Explain total assets equal the sum of total liabilities, Why do total asset...

Why do total assets equal the sum of total liabilities and equity?  Explain. Assets = Liabilities + Equity Assets are the items of value that a business owns. Liabilities ar

The japanese pension fund system, The Japanese Pension Fund System The J...

The Japanese Pension Fund System The Japanese pension system is a multi-pillar system. Public and private pension schemes are the two important pillars. The first tier is the Ba

Explain exchange rate risk, Explain Exchange Rate Risk Exchange-rate ri...

Explain Exchange Rate Risk Exchange-rate risk denotes to the risk the swap bank faces from fluctuating exchange rates throughout the time it takes the bank to lay off a swap it

Budget classification on the basis of flexibility, ON THE BASIS OF FLEXIBIL...

ON THE BASIS OF FLEXIBILITY • Fixed budget: this is designed to stay unchanged irrespective of the volume of output or turnover attained.  The budget remains unchanged over

Working of securities and exchange commission, Working of SEC The SEC s...

Working of SEC The SEC supervises the main members in the securities world, including securities brokers and dealers, securities exchanges, investment advisors, and mutual fund

International markets, Explain the random walk model for exchange rate fore...

Explain the random walk model for exchange rate forecasting. Can it be consistent with technical analysis?

Analysis of financial plans, Part 1: Contingency plan Create contingency pl...

Part 1: Contingency plan Create contingency plans for the following scenarios: > One of your highly qualified consultants has given three months notice and is planning to move to a

What are the objectives of the insurance companies, What are the objectives...

What are the objectives of the Insurance Companies? Insurance companies: The main objective of insurance companies is to prevent individuals and firms (termed as policy-h

Valuation models, V aluation Models A valuation model defines the e...

V aluation Models A valuation model defines the exercise of applying financial and economic principles to estimate the value of an asset. Discounted cash flow valuation mod

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