What is Working Capital?

Working capital is required to operate the day to day activities of the organization. Working capital is the amount of a company's current assets minus the number of its current liabilities.
The working capital is calculated as:

There are two concepts of working capital such as:
1. Gross working capital
2. Networking capital

Gross working capital: Gross working capital is the total of current assets.

Net Working Capital: Net Working Capital is the difference between current assets and the current liabilities.

Some important points:
1. Finished goods are calculated on the cost of production.
2. Debtors/accounts receivable is calculated on the cost of sales/ sales price.
3. If the completion period /stage is not given it is assumed that material will be used at the beginning of the production and labor and overhead will be at 50% completion stage.
4. profit will not be considered in the working capital completion mainly because it is not a source of financing working capital.
5. Production will be carried out through the year and labor and overhead will be used similarly.

Category and Tags
Add a comment
More stories by
Robi Will Raise Tk 5.2b Through IPO

Robi, the country's second largest mobile phone operator, has started preparations to enter the capital market. Robi's parent company Axiata has also given conditional permission to raise Tk 523 crore from the Bangladeshi capital market through an in

Social Media- a New Marketing Tool: A Case Study on Bangladeshi Market

Prepared by:Shakila Islam EvanaLecturer (Marketing)Tejgoan Mohila CollegeAbstractSocial Media, today, is among the ‘best opportunities available’ to a brand for connecting with p...

Bangladeshi University Students to Get Loan for Smartphone From Government

All educational institutions in the country have been closed for a long time due to the ongoing pandemic Coronavirus. In this situation, educational activities are being carried out ...

Japan Will Provide Subsidy if the Factory is Brought to Bangladesh from China

The Japanese government has announced to subsidize its industrialists if they move their factories from China to Bangladesh to produce goods. The co...

Early Success in the Project of Placing Chips in the Human Brain!

Elon Musk's reputation as an entrepreneur is worldwide. Two of his most popular ventures are Tesla and SpaceX. In addition to these, he is moving forward with another different project. His new project is called Neur...

Follow Business Habit on Facebook, Twitter