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

6 KEY STAGES OF INVESTMENT DECISION WITH APPROPRIATE DIAGRAM, 6 KEY STAGES ...

6 KEY STAGES OF INVESTMENT DECISION WITH APPROPRIATE DIAGRAM

Liquidity, The capability of an asset to be converted into cash as quickly ...

The capability of an asset to be converted into cash as quickly as possible without any discount to its value.

Objectives of cash management, Q. Objectives of Cash Management? (i) To...

Q. Objectives of Cash Management? (i) To sustain Optimum Cash Balance: - The major objective of cash management is to determine the optimum cash balance required in the busines

Budgeting, Budgeting: All business owners should recognise and understa...

Budgeting: All business owners should recognise and understand the importance of preparing and maintaining a financial budget for their business. Budgets are an essential fi

Find capital allowances and associated tax benefits, Q. Find Capital allowa...

Q. Find Capital allowances and associated tax benefits? It is suitable to use the after-tax cost of borrowing as the discount rate since Doe Ltd is clearly in a tax-paying situ

How is present value affected by change in the discount rate, How is presen...

How is present value affected by a change in the discount rate? Present value is inversely associated to the discount rate.  In other words current value moves in the opposite

How do financial managers decide which proposed capital, For a given IOS an...

For a given IOS and MCC, how do financial managers decide which proposed capital budgeting projects to accept, and which to reject? For a given MCC and IOS, all independent pro

Merits of net present value method, Q. Merits of net present value method? ...

Q. Merits of net present value method? Merits of NPV method:- (i) Time value of funds is taken into consideration: - For the reason that this method takes into account the t

Define the term- cash purchases, Define the term- Cash purchases     Shar...

Define the term- Cash purchases     Shareholders of the target company are bought out completely and have no further stake in business. This is good if predator shareholders want

Cost-volume-profit analysis, Cost-Volume-Profit Analysis The Cost-Volum...

Cost-Volume-Profit Analysis The Cost-Volume-Profit (CVP) analysis provides answers to vital questions such as: At what sales volume would the firm break-even? How sensitive is

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