In this article we will discuss about the working capital requirements of a business. Factors Determining Working Capital Requirement: There is no set of universally applicable rules to ascertain working capital needs of a business organization. The factors which influence the need level are discussed below: a. Nature of business: If we look at the balance sheet of any trading [...]
The following points highlight the top ten sources of working capital finance. The sources are: 1. Intercorporate Loans and Deposits 2. Commercial Paper (CP) 3. Funds Generated from Operations 4. Retained Profit 5. Depreciation Provision 6. Amortisation Provisions 7. Deferred Tax Payments 8. Accrued Expenses 9. Deposits and Advances 10. Public Deposits. Source # 1. Intercorporate Loans and Deposits: In [...]
The following points highlight the top three methods of working capital estimation. The methods are: 1. Percentage of Sales Method 2. Regression Analysis Method 3. Operating Cycle Method. 1. Percentage of Sales Method: It is a traditional and simple method of determining the level of working capital and its components. In this method, working capital is determined on the basis [...]