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

Yield curve shift, The relative change in the yield for each treasury...

The relative change in the yield for each treasury maturity is known as a shift in the yield curve. When the change in the yield for all the maturities is same, t

Explain term lenders, Lenders Lenders are concerned to receive payment ...

Lenders Lenders are concerned to receive payment of interest and ultimate re-payment of capital. They don't share in the upside of very successful organisational strategies as

What are the benefits of collecting early and how it attempt, What are the ...

What are the benefits of "collecting early" and how do companies attempt to do this? A fund has time value.The sooner money is collected the better.  Companies utilize regional

Calculate the companys horizon value, A. Mitt starts Examine Your Zipper In...

A. Mitt starts Examine Your Zipper Incorporated ("XYZ") in 2012 by selling common stock of $12,000,000. He promises the investors in his company a 15% return on their capital. B

Graduated-payment mortgages (gpms), The payments on GPMs unlike the p...

The payments on GPMs unlike the payments on traditional mortgages are not equal. The payments under GPMs start at a relatively low level and rise for a specified

Operating cycle, Uses of operating cycle in business

Uses of operating cycle in business

Specialized stock indexes, Specialized Stock Indexes The most regularly...

Specialized Stock Indexes The most regularly quoted market indices are those that include the stocks of the largest listed companies on a nation's largest stock exchange. Examp

Calculate the forward exchange rate, (a) A debt of $3600 with interest at 6...

(a) A debt of $3600 with interest at 6% compounded semiannually is to be amortized by semiannual payments of $900 each, the rst due in 6 months, together with a nal partial payme

Certificate of deposits, A Certificate of Deposit (CD) can be defined...

A Certificate of Deposit (CD) can be defined as a negotiable promissory note, secure and short-term in nature. CDs are issued at a discount to the face value, the

Treasury coupon strips, Observed yield on strips can be used to const...

Observed yield on strips can be used to construct an actual spot rate curve, but it is not free from drawbacks. There are some problems with this; first, the liqu

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