Horti-Business Management (2+0)

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.