Sources of working capital, Managerial Accounting

Sources of Working Capital Finance

Working capital finance may be classified in the subsequent:

  • Spontaneous Source of Finance

Finance that naturally arises in the course of business is termed as spontaneous financing. Trade creditors, credit from suppliers of services, credit from workers etc. are the illustrations of spontaneous financing.

  • Negotiated Financing

Financing that has to be negotiated along with lenders, that are commercial banks, general public, financial institutions is termed as negotiated financing. This type of financing may either be short or may be long-term in nature.

Before negotiated and spontaneous sources of finance, the latter is more costly and inconvenient to rise. Spontaneous source of finance decreases the amount of negotiated financing. Working capital can be categorizes in long- and short- term sources, that can be analyzed as demonstrated in figure 4.


Figure: Financing Mix of Working Capital

Posted Date: 4/9/2013 3:03:16 AM | Location : United States

Related Discussions:- Sources of working capital, Assignment Help, Ask Question on Sources of working capital, Get Answer, Expert's Help, Sources of working capital Discussions

Write discussion on Sources of working capital
Your posts are moderated
Related Questions
Advance Factoring and Maturity Factoring: In both recourse and non-recourse factoring whether the factor advances cash against book debts to the client instantly on assignment

Computing equivalents units and assigning costs to completed units and ending work in process; no beginning inventory or cost transferred in (30 -45min) Sue Electronics makes CD p

Your company is considering investing in its own transport fleet. The presentposition is that carriage is contracted to an outside organization. The life of thetransport fleet woul

The firm's require holding cash may be attributed to the three motives specified below: The transaction motive The precautionary motive The speculative motive.

Relevant costs and benefits for operating decisions: In operating decisions, concentration is on best use of existing capacity. Incremental analysis based on differential cost

It refers to the length of time given to the buyer to pay for their purchases. Throughout this period no interest is charged on the excellent amount. The credit period usually vari

Management Accounting 1) Which is concerned with provision of information to people within the organization to help them make better decisions? Management accounting is concer

Advantage of relevant cost

Maximum change in marginal Profit or Cost Just as we did in studying the permissible ranges for changes in resources, we are also interested in studying the permissible ranges

M/s ABC has an existing sales of Rs.50 lakhs and permits a credit period of 30 days to its customers.  The firm cost of capital is 10% and the ratio of variable cost to sales is 85