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2.3

CONCEPT OF WORKING CAPITAL / d{Hª$J H¡${nQ>b H$s AdYmaUm

Q.14. Explain the concept of working capital.
d{Hª$J H¡${nQ>b H$s AdYmaUm g_PmB`o&
OR
Write a short note on Dimensions of working capital.
d{Hª$J H¡${nQ>b Ho$ Am`m_m| na g§{jßV {Q>ßnUr {b{IE&
Introduction to Working Capital d{Hª$J H¡${nQ>c H$m n[aM`

Working capital may be regarded as the d{Hª$J H¡${nQ>c H$mo {H$gr {~OZog H$m OrdZaº$ H$hm
life blood of a business. It is closely related Om gH$Vm h¡Ÿ& `h {~OZog H$s {XZ-à{V{XZ H$s J{V{d{Y`m|
with day-to-day operations of the business go Ow‹S>r hþB© hmoVr h¡ Am¡a Bg{cE BgH$m _hËd B§Q>Z©b$Ed§
and so it is important for external as well as EŠgQ>Z©b XmoZm| EZm{b{gg Ho$ {cE h¡Ÿ& àË`oH$ {~OZog H$mo
internal analysis. Every business needs funds Xmo CÔoí`m| Ho$ {cE \$ÊS> H$s Amdí`H$Vm hmoVr h¡Ÿ& {\$ŠñS>
for two purposes. Long-term funds are required AgoQ²>g O¡go- ßcmÝQ>, _erZar Am{X H«$` H$aZo Ho$ {cE
to create production facilities through
bm§J-Q>_© \$ÊS> Amdí`H$ hmoVm h¡ {OZgo àmoS>ŠeZ Ho$ {cE
purchase of fixed assets e.g. plants, machinery,
Amdí`H$ CnH$aUm| H$s ì`dñWm H$s OmVr h¡Ÿ& BgHo$ gmW
etc. Funds are also needed for short-term
hr \$ÊS> H$s Amdí`H$Vm em°Q>©-Q>_© CÔoí`m| Ho$ {cE ^r hmoVr
purposes for the purchase of raw materials,
h¡ O¡go- am° _Q>o[a`b IarXZm, _OXyar H$m ^wJVmZ d AÝ`
payment of wages and other day-to-day
{XZ-à{V{XZ Ho$ ì``m| H$m ^wJVmZ H$aZmŸ& Bg \$ÊS> H$mo
expenses. These funds are known as 'working
'd{Hª$J H¡${nQ>c' H$hm OmVm h¡Ÿ& AÝ` eãXm| _|, d{Hª$J
capital'. In other words, working capital refers
H¡${nQ>c \$_© H$s Hw$c H¡${nQ>c H$m dh ^mJ h¡ Omo em°Q>©-
to that part of a firm's capital which is required
Q>_© `m H$aÝQ> AgoQ²>g H$s \$m`ZopÝg¨J Ho$ {cE Amdí`H$
for financing short-term or current assets e.g.,
hmoVm h¡, O¡go- H¡$e, S>oãQ>g©, BÝdoÝQ>ar, Am{XŸ& gå^dV:
cash, debtors, inventories, etc. The name
'd{Hª$J H¡${nQ>c' eãX Bgr{cE àMcZ _| Am`m Š`m|{H$ `h
'working capital' is perhaps derived from the
fact that this is that part of total capital which Hw$c H¡${nQ>c H$m dh ^mJ hmoVm h¡ Omo dmñVd _| \$_© Ho$
really, 'works' to produce profits for the firm. {cE àm°{\$Q> A{O©V H$aZo Ho$ {cE 'dH©$' H$aVm h¡Ÿ&
Concept of Working Capital d{Hª$J H¡${nQ>c H$s AdYmaUm
Working capital means the firm’s holdings d{Hª$J H¡${nQ>c H$m Ame` \$_© H$s H$aÝQ> `m em°Q>©-
of current or short-term assets such as cash, Q>_© AgoQ²>g O¡go- H¡$e, S>oãQ>a, BÝdoÝQ>ar Am¡a ~oMZo `mo½`
receivables, inventory and marketable {gŠ`y[aQ>rO go h¡& `h H$ånZr H$s XjVm Am¡a CgH$s
securities. It is a measure of company’s efficiency
and its short-term financial position. The em°Q>©-Q>_© \$m`ZopÝe`b nmo{OeZ H$mo _mnVm h¡& d{Hª$J H¡${nQ>c
working capital ratio is calculated as current H$m AZwnmV H$aÝQ> AgoQ²>g-H$aÝQ> bm`{~{c{Q>O Ho$ ê$n
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