Describe the working capital, Financial Econometrics

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Q. Describe the Working capital?

Working capital is the capital available for conducting day-to-day operations of the business and includes current assets and current liabilities.

Current assets

Current liabilities

Inventories

Trade receivables

Cash

Short term investments

Trade payables

Bank overdrafts

Working capital can be viewed as a whole though interest is generally focussed on the individual components like inventories or trade receivables. Working capital is effectively the net current assets of a business.

Working capital can be either:

Positive 

 

Current assets are greater than current liabilities

Negative

Current assets are less than current liabilities


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