Working Capital - Current Assets and Current Liabilities
I do not know the meaning of Working Capital Requirements. I think this should be same to Working Capital (Current Assets – Current Liabilities). There am I right?
Expert
The Working Capital Requirements shows the difference among the current assets essential for the operations of the company (minimum cash holdings, inventories and clients) and the current liabilities without financial debt (provisions and providers etc.). They are different from Working Capital since the latter does consider financial debt. While a company grows, its financial necessities raise more or less proportionally to the Working Capital Requirements.
The financial ratios of a firm are as follows. Current ratio = 1.33 Acid-test ratio = 0.80 Current liabilities = 40,000 Inventory turnover ratio = 6 What is the sales of the firm?
Regular meeting of day-to-day commitments: The estimation of WCR also helps to ensure that there is positive WC existence. This proves helpful in meeting requirements which are regular in nature such as payments of salaries, wages, rental charges etc.
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