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3.1. Capital and credit requirements of fishery sector at macro and micro levels
Unit 3- Fishery Financial Management and Insurance
3.1. Capital and credit requirements of fishery sector at macro and micro levelsCredit requirements of the fishers and fish farmers are being largely met through institutional sources. Nevertheless, the critical role of the middlemen, merchants and traditional money lenders in the chain is still in vogue. However, the present liberal policies of the banking sector hold a considerable hope for improvement particularly in the fishery sector.
Types of capital:
Investment capital and working or operating capital
Investment capital: The term Capital Investment has two usages in business. Firstly, Capital Investment refers to money used by a business to purchase fixed assets, such as land, machinery, or buildings.
Secondly, Capital Investment refers to money invested in a business with the understanding that the money will be used to purchase fixed assets, rather than used to cover the business' day-to-day operating expenses.
Working capital: working capital means the amount of funds required by an enterprise to finance its day to day operations. It is that part of the total capital which is employed in short term assets such as raw materials, accounts receivable, inventory, etc. the term working capital is used in two different senses:
Gross working capital: it means the total value of current assets. Current assets are the assets, which are converted into cash within a period of one year. These include cash in hand, cash at bank, stock or inventory, bills receivable or short term investments.
Net working capital: it implies the excess of current assets over current liabilities. Current liabilities consist of accounts payable, bills payable, outstanding expenses. These liabilities are payable within a year.
Last modified: Wednesday, 30 May 2012, 4:49 AM