Accounts and Finance
Step 7 Ratio Analysis

What is Working Capital in Finance and Accounts

Last updated at Dec. 16, 2024 by

Capital Required in Business is of 2 types

1.Fixed Capital

2. Working Capital

 

 

Fixed Capital means

Capital or Money required for Fixed Assets of Company

 Example :- Owner's Capital,Profit  and Long Term Loans

 

Working Capital means

Capital or Money required for Routine Day to Day Operations of Business

 

 

How to Calculate Working Capital

Working Capital =Total Current Assets-Total Current Liabilities

 

Example

Following is Balance Sheet of Company

Liability Amount Asset Amount
Capital 10000 Fixed Assets 100000
Reserves 20000 Less  
Secured Loan 80000 Dep 20000
Unsecured Loan 20000 Net Amount 80000
       
Current Liabilities   Current Assets  
Sundry Creditors 30000 Debtors 60000
Bank OD 10000 Cash and Bank 30000
Total 170000 Total 170000

Calculate Fixed Capital and Working Capital?

View Answer

 

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CA Maninder Singh is a Chartered Accountant for the past 14 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.