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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
a debit is used to record
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