Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
The decisions about long-term investment are depends on judgments on future cash flows, the improbability of such cash flows and the opportunity cost also of the funds to be invested. In so far as working capital management decisions are related the underlying criteria are similar but, there is a raised focus on liquidity and management of operating cycle. Operating cycle terms to the time this takes to exchange current assets as excluding cash in cash. The operating cycle in part finds out how long it gets for a firm to produce cash from current assets and thus the risk and cost of its investment in working capital or current assets. Working capital is the capital which can be instantly put to work to make the benefits of capital investment. Working capital is also termed as circulating or current capital.
The main difference among long and short-term financial management i.e. also considered as working capital management is about quantum and frequency of cash flows. The amount of funds dedicated are generally large and one off decision in case of long-term financial management whereas, in case of short term financing the amount of funds offer are relatively tiny and frequently repetitive in nature. The impact of long term financing ranges over an extended period of time generally 15 to 20 years or more, while, the impact of short term financing is inside the operating cycle generally ranging from three months to a year.
Two concepts of working capital are as:
(i) Gross working capital
(ii) Net working capital
The gross working capital is the sum of all current assets. Net working capital is the diversity between current liabilities and assets. The constituents of working capital are demonstrated in Table no.1. Part A of this table demonstrates current assets and part B of this table demonstrates current liabilities.
Table no.: Constituents of current assets and current liabilities
Part A
Part B
Current Assets
Cash and Bank Balances
Inventories
Raw material and components, work in progress/process (WIP) finished goods, trade debtors, loans and advances, investments, pre-paid expenses
Current Liabilities Sundry Creditors Trade Advances
Borrowings (short term) Outstanding expenses
Taxes and dividends payable,
Other liabilities maturing within a year
This section deals along with specific aspects and considerations concerned to overall working capital management and is separated in the subsequent sections:
Steps of Graphic Analysis There are four steps in using graph paper to study cost-volume relationships: Step 1: Compute the scale which you will use: Volume is considered
You want to purchase a house that costs $325,000. You have a down payment of $65,000 and will take out a mortgage to make up the difference. The AMC Mortgage Corporation offers a q
What is Programmer budgeting It is a combination of programming and systems refers to the activity and system analysis refers to cost benefit analysis or operations research. I
Responsibility Accounting This is a term used to define the measuring of performance of decentralized units, using account results. Responsibility accounting recognizes various
WHY VARIANCES IS INVESTIGATED UNDER STANDARD COSTING
Planning A business must plan for its success. What do we understand by business planning? It is about thinking in advance -- to decide on a course of the action to reach
Constraints 1) A constraint of the type ≤ (≥) can be converted to an equation by adding a slack variable to (subtracting a surplus variable form) the left side of the constrain
Correlation coefficient (r) Correlation coefficient measures the degree of association between two variables such as the cost and the activity level. r = nΣxy - Σx Σy
X's Strategy X will like to divide his play between his rows in such a way that his expected winnings or losses when Y plays the first column will be equal to his expected winn
Budgetary Control According to brown and Howard According to brown and Howard," budgetary control is a system of controlling costs which includes the preparation of budget coor
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd