Railway Accounts Department Examinations

Showing posts with label working capital. Show all posts
Showing posts with label working capital. Show all posts

Wednesday, April 1, 2020

Working Capital Management Accounting for LDCE

                                                      Working Capital Management Accounting for LDCE

1991 LDCE SCR - 5 marks

 

ü  Meaning:  Represents the amount of funds required to finance " the day to day activities".

 

ü  Excess of Current Assets over Current Liabilities.

 

ü  It should be ideal/sufficient.  That means neither more nor less to the correct requirements of working capital.

 

ü  Shortage - Difficult to manage day to day activities/payments.

 

ü  Surplus - Capital will be blocked / unutilized.

 

ü  So it should be sufficient to meet current obligations  ( not long term obligations)

 

ü  The difference between Gross Working Capital and Net Working Capital is "Current Liabilities". Total sum of all current assets is called Gross Working Capital.  The difference between Current Assets & Current Liabilities is called Net Working capital.

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