Data Structure
Networking
RDBMS
Operating System
Java
MS Excel
iOS
HTML
CSS
Android
Python
C Programming
C++
C#
MongoDB
MySQL
Javascript
PHP
What is Net Working Capital Management?The concept of net working capital management should be applied to organizations individually as there is no precise measure to which the net concept of working capital management should be applied to a firm. It depends on the financial status and needs of an organization to which the net concept should be applied to get a holistic solution for managing working capital.Working capital management is related to the management of all aspects of working capital. These aspects are marketable securities, cash, stock, debtors, and creditors. Financial managers must focus their attention on these aspects as ... Read More
Role of Credit PolicyIt is known to all that having a good amount of working capital is necessary for the smooth functioning of businesses. For example, the credit policy of a company plays a pivotal factor in managing the working capital of a company.Companies often need to sell their products on credit to keep and gain market share. It is not possible for all products to get sold instantly which can generate immediate revenues. Therefore, the retailers may ask for a credit to sell the products and then pay for them to the manufacturers.A business company therefore must adhere to ... Read More
What is Operational Efficiency?Operating efficiency is the efficiency that is obtained due to efficient utilization of fixed and current assets and other resources of the firms. It is an indicator of better management and good health of a business firm. Operating efficiency is not easy to obtain because all of the resources of a company must work in tandem to achieve it.Operating efficiency is the use of the resources of the company at the minimum cost. Therefore, it is the optimum utilization of funds at minimal expenses. As the companies strive to utilize all of the resources, the use of ... Read More
Although there are no hard and fast rules for determining the working capital for a company, there are many factors that affect it. It is the duty of management to judge the right amount of working capital for running the organization and keep the adequate amount of working capital available for the firm to stay competitive in the business operations.Factors Affecting Company’s Working CapitalHere are some of the most influential factors that impact the working capital of a company.Nature of the BusinessThe nature of the business influences the working capital to a large extent. Financial and trading firms do not ... Read More
What is a Working Capital?Working capital is the fuel for running businesses the companies. It may be stated that maintaining an adjusted amount of working capital is the first and foremost aim of business organizations. While having too much working capital is bad, an inadequate amount of working capital can create problems in running the businesses smoothly as well.While having too much working capital is bad, having too low working capital is also a sign of weakness of a business firm. In order to keep the business running on a smooth path, the firm must maintain a healthy amount of ... Read More
What is a Working Capital?Both temporary and permanent working capital are necessary to run a business smoothly. Working capital acts as fuel in running business activities. While temporary working capital provides the expenses to meet general day-to-day needs, permanent working capital helps businesses meet larger demands in the future.As working capital is an unavoidable part of businesses, one may think that having working capital in excess may be a good option for the businesses. Unfortunately, this is not true. While having low working capital is deteriorating, having working capital in excess also has its own perils.Risks of Having Excessive Working ... Read More
What is an Operating Cycle?An operating cycle is the time needed to convert sales into cash after converting the resources into inventories. In fact, no company generates sales after the production of a good instantly. It has to wait for some time to sell the goods in the market after purchasing raw materials and other necessary items and producing the finished goods.The operating cycle of a manufacturing company has the following three phases −Acquisition of resources − This is the beginning phase where raw materials used for the finished products are resourced and collected.Manufacturing of the product − This is ... Read More
The major differences between Temporary and Permanent working capital are as follows −Based on NeedsTemporary and permanent working capital differ in terms of their need. The permanent working capital is a fixed amount of working capital that is kept fixed for the long-term needs of the business. The temporary working capital, on the other hand, is meant for day-to-day, short-term expenses.Temporary working capital is an additional amount of capital kept reserved above the permanent working capital. Therefore, permanent working capital is a large amount of capital while temporary capital is a smaller amount of capital.Based on UsageTemporary working capital is ... Read More
The operating cycle is the time required for converting sales into cash after converting resources into inventories. The operating cycle of a manufacturing firm is different from non-manufacturing companies because manufacturing companies need to resource raw materials and convert them into finished goods. While non-manufacturing companies can go directly from the acquisition of services or products to sales, manufacturing companies need to consider the time required for manufacturing the goods. So, generally, the operating cycle of a company is more prolonged than non-manufacturing companies.The operating cycle of a manufacturing company is made up of three phases −Acquisition of Raw materials ... Read More
An operating cycle is the time needed to convert sales into cash after converting the resources into inventories. In fact, no company generates sales after the production of a good instantly. It has to wait for some time to sell the goods in the market after purchasing raw materials and other necessary items and producing the finished goods.An operating cycle is divided into two types as follows −Gross Operating Cycle (GOC).Net Operating Cycle (NOC).Here’s more about GOC and NOC and their differences.Gross Operating CycleThe gross operating cycle of a firm can be expressed as the Inventory conversion period (ICP) plus ... Read More