INTRODUCTION TO WORKING CAPITAL
Capital required for day to day working in the business concern, for purchasing raw material, for meeting day to day expenditure on salaries, wages,rent, rates, advertisement, etc. is called as working capital.It represents the portion of the business concern total financial resource, whichis put to variable operative purpose .these are two concept of working capital
Gross working capital.
Net working capital.Gross working capital refers to firm total current assets .It can alsocalled as circulating capital.Gross working capital =Total current assetsNet working capital =current assets –current liabilitiesCurrent assets are those assets which have short life span and areconverted into cash in accounting year the major current assets are cash bank balance, marketable securities, accounts receivable and inventories.Current liabilities are those liabilities which are intended to be paid in theordinary course of business within a year. The basic current liabilities account payable, bank overdraft, outstanding expenses.