Show gross vs net working capital, Financial Management

Assignment Help:

Q. Show Gross Vs net working capital?

The distinction between the gross working capital or the net working capital does not in any way undermine the relevance of the concepts of either gross or the net working capital financial manager is consider both of them because . The provide the different interpretations. The gross working capital denotes the total working capital or the total investment in the total current assets. a firm should maintain an optimum level of the gross working capital.

Effect of the probability (because over flow working capital implies the costs) therefore a firm should have just adequate level of the total current assets. the gross working capital is given an idea of the total funds require for maintain of the current assets On the other hands, net working capital refers to the amount of the funds that must be invested by the firm more or the less regularly in the current assets being financed by the current liabilities. The networking capital also denotes the net liquidity being maintained by the firm. This also gives the idea of the buffer available to the current liabilities.
Both concepts of working capital the gross working capital or net working capital have their own relevance and a financial manager should give due attention to the both of these. The cash inflows and outflow of any firms are seldom and so some working capital is necessary. the cash outflow is occurring from the existence of current liabilities is more easily and correctly predictable but the cash flow from the current assets are difficult to be accurately predicted the more predictable these cash flow are the less net working capital require by the firm. The firm with more and more uncertain cash flow must maintain the higher and higher level of the current assets adequate to cover the current liabilities.


Related Discussions:- Show gross vs net working capital

Fixed rate versus floating rate asset backed securities, There are fi...

There are fixed as well as floating rate asset-backed securities. A floating rate asset-backed security is one whose underlying pool consists of loans or receivab

What do you signify by risk analysis in capital budgeting, Q. What do you s...

Q. What do you signify by Risk Analysis in Capital Budgeting? Risk Analysis: - Risk in an investment demotes to the variability that is likely to observe between the estimated

hazard or risk , For this assessment, you are required to choose one workp...

For this assessment, you are required to choose one workplace hazard or risk to safety in the financial services industry that interests you. Prepare a report on the area you have

Monthly cash flow, I need to prepare a monthly cash flow for a company with...

I need to prepare a monthly cash flow for a company with the given information, and need to comment on the current performance and the future sales increment. Then we need to find

Other types of bonds, Various other types of bonds are- 1. Domestic Bond...

Various other types of bonds are- 1. Domestic Bonds 2. Foreign Bonds 3. Euro Bonds  4. Global Bonds 5. Floating Rate-Bonds

Describe the meaning of net income plus depreciation, The so-called "cash f...

The so-called "cash flow" (net income plus depreciation) is a flow of cash, but is it a flow to the shareholders or to the company? Suppose that net income plus depreciation is

Enumerate the present value of an annuity, Enumerate the Present Value of a...

Enumerate the Present Value of an Annuity Present value of an annuity can be calculated by: Present Value = A [ {(1+i) n -1} / i (1+i) n ] Or to use the tables change

Define the term corporate and financial relations, Question: (a) Define...

Question: (a) Define the term "corporate and financial relations" and clearly state its components. (b) By using one example, identify the steps required to establishing cor

Advantage of profitability index method, Q. Advantage of Profitability Inde...

Q. Advantage of Profitability Index method? Advantage of PI method:- (i) Similar to the other DCF techniques the PI method as well takes into account the time value of money

IRR, WHAT IS METHOD FOR FINDING IRR

WHAT IS METHOD FOR FINDING IRR

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd