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What's capital and what's working capital?

I won't talk about the theoretical definition of Capital, I'll just explain the basic idea about both, Capital is the major amount of assets has been transferred to company's acquisition, even if not delivered, or used, in any form ( Cash, Assets in different company, Machines ... etc).

Working capital has to meaning actually:-

 The needed fund to operate for one operation cycle, like in industrial sector, to produce for one period according to your plan, and only people who are setting new business use this term, for planning for new company, because after this it becomes outcome from financial analysis as below.

  The exact amount used in specific period to cover the company main activities, which means if you have a big company which work in specific industry, cars for example, but yet it has too much money in it's account, and many investments in other companies, also spent in social and sports activities, financial Statement users  always need to see need to see if the company actually can cover it's short term commitments or not, and that comes from the known equation (  current assets - current liabilities ) and this is an important indicator to the companies status and investing decision.

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تم إضافة السؤال من قبل Ossama Al-Arabi , Account Advisor , Raya
تاريخ النشر: 2016/10/18
FATEH BOUCHENE
من قبل FATEH BOUCHENE , institut d'emission , banque centrale d'algerie

SILVER AND HUMAN RESOURCES ARE THE FACTORS Keys to Success

Syed Gazi Hussain
من قبل Syed Gazi Hussain , Sr Accountant , Creative Marketing & Advertising Solution Ltd

Working capital is the amount of a company's current assets minus the amount of its current liabilities.you will get the working capital.

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