No business enterprise can carry out its day-to-day activities smoothly without focusing on gross and net working capital. Gross working capital refers to the funds invested in current assets, whereas net working capital refers to the excess of current assets
The working capital of an enterprise can be calculated by applying a simple formula: working capital = current assets – current liabilities. Current assets includes short-term assets that can be converted into cash within a year, whereas current liabilities refer
In simple language working capital can be described as the funds required by an enterprise to finance its day-to-day operations. The working capital of a business is calculated by deducting current liabilities from current assets. Hence, an enterprise has a
The capital required by a business can be divided into two broad categories – fixed capital and working capital. Fixed capital refers to the amount invested in long-term assets. This category of capital is not consumed during the production process.