BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Gross working capital
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Permanent working capital
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Net working capital
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Temporary working capital
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Detailed explanation-1: -Permanent working capital means the part of working capital which is permanently locked up in the current assets to carry out the business smoothly. The minimum amount of current assets which is required to conduct the business smoothly during the year is called permanent working capital.
Detailed explanation-2: -What Is Working Capital? Working capital, also known as net working capital (NWC), is the difference between a company’s current assets-such as cash, accounts receivable/customers’ unpaid bills, and inventories of raw materials and finished goods-and its current liabilities, such as accounts payable and debts.
Detailed explanation-3: -Working capital includes only current assets, which have a high degree of liquidity-they can be converted into cash relatively quickly. Fixed assets are not included in working capital because they are illiquid; that is, they cannot be easily converted to cash.
Detailed explanation-4: -Working Capital is also known as circulating capital.