What Are The Specific Determinants Of Working Capital?


2 Answers

Anonymous Profile
Anonymous answered
Production policies
length of the period of manufacturing process
amber Jhon Profile
amber Jhon answered
Working capital is the difference between the current assets and the current liabilities. The major determinant of the working capital is the size and the structure of the working capital. Companies with bigger sizes and structures have high working capital requirements. Second determinant of working capital is the nature of the business for example, banks have high current liabilities and low current assets therefore, their working capital is different as compare to a company dealing with manufacturing business.

thanked the writer.
Anonymous commented
Thanks for answering but it answers actually how much working capital is needed for a company.

Determinants of working capital is something related to accounts receivable,accounts payable and inventory.at the same time there are related ratios.
Anonymous commented
The determinants of working capital are as follows:
1) Cash and cash equivalents; this is the most liquid form of working capital which requires constant supervision.
2) Account Receivables;many business extend credit to their customers. If you do so , is the amount of account receivable reasonable relative to sales?
3) Inventory
4) account payable
5) accrued expenses and taxes payable;these are obligations of your company at any given time and represent a future outflow of cash.

Answer Question