Working capital:- formula and it's management

Working Capital definition:-

     Working capital is the amount needed (or) capital needed to run day-to-day activities of a business.

           Working capital is divided on (i) basis of Concept and (ii) on basis of time.

(i) On basis of Concept:-

     Gross working capital

      Net working capital

(ii) On basis of Time:-

       Permanent / Fixed working capital

       Temporary / fluctuating working capital.

  Efficient management of working capital decides the success of a business.

Working capital formula:-

   Net Working capital is equal to the current assets - current liabilities.

            Working capital =current assets- current liabilities

     Gross working capital is equal to the total amount of current assets only.