There are four methods for estimating the working capital requirements of a firm. The methods are: 1. Percentage of Sales Method 2. Regression Analysis Method 3. Operating Cycle Method 4. Individual Components Method. 1. Percentage of Sales Method: It is a traditional and simple method of determining the level of working capital and its components. In this method, working capital [...]
In this article we will discuss about the estimation of working capital need of a company in special situations. Seasonal Industries: In the seasonal industries, the level of working capital requirement will not be similar all through the year. In times of off-season, the working capital requirement and the levels of investment in current assets and liabilities are very low. [...]
After reading this article you will learn about:- 1. Meaning and Concept of Working Capital 2. Classification of Working Capital 3. Factors 4. Sources 5. Uses. Meaning and Concept of Working Capital: Working Capital refers to a firm's investment in short term assets-cash, short term securities, accounts receivable and inventories. Net Working Capital is defined as current assets minus current [...]