Components of working capital

Components of working capital

    • The working capital has following components, which are in several forms of current assets. The basis for assigning value to each component is shown against each.

    Components of working capital Basis of valuation
    Stock of cash Purchase cost of raw materials
    Stock of raw materials Prime cost
    Stock of finished goods Cost of production
    Value of debtors Cost of sales or sale value
    Miscellaneous current assets like short term investment loans and advances etc Working expenses

    • Each constituent of the working capital is valued on the basis of valuation enumerated above of the holding period estimated. The total of all such valuation becomes the total estimated working capital requirement.
     

Last modified: Tuesday, 26 June 2012, 4:56 AM