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BRILLIANT’S Working Capital Management 125

within an accounting year, like creditors, bills {bE _¡À`moa hmo OmE±Jr O¡go- H«o${S>Q>g©, Xo` {~b Am¡a
payable and outstanding expenses. AmCQ>ñQ>¢qS>J EŠgn|gog&
If the current assets are more than current `{X H$aÝQ> AgoQ²>g, H$aÝQ> cm`{~{c{Q>O go A{YH$
liabilities, it is called 'positive working capital'. h¢ Vmo Bgo "nm°{O{Q>d d{Hª$J H¡${nQ>c" H$hVo h¢& BgHo$
On the other hand, when current liabilities
are greater than current assets, it is called {dnarV cm`{~{c{Q>O, AgoQ²>g go A{YH$ hmoZo na Cgo
'negative working capital'. "ZoJo{Q>d d{Hª$J H¡${nQ>c" H$hVo h¢&
Note: The two concepts of working ZmoQ>… d{Hª$J H¡${nQ>c H$s Xmo H$ÝgoßQ>-J«m°g Am¡a ZoQ>
capital-gross and net are not exclusive. They EŠgŠby{gd Zht h¢& _¡ZoO_|Q> H$s Ñ{ï> go BZH$m g_mZ
have equal importance from management point
of view. A financial manager must consider _hËd h¡& EH$ \$m`ZoÝg _¡ZoOa H$mo BZ XmoZm| na {dMma
both of them because they provide different H$aZm hmoVm h¡ Š`m|{H$ `o {d{^Þ AW© àXmZ H$aVr h¢&
interpretations.
The gross working capital shows the total J«m°g d{Hª$J H¡${nQ>c H$a§Q> AgoQ²>g _| Hw$b BÝdoñQ>_|Q>
investment in current assets. The gross Xem©Vr h¡& J«m°g d{Hª$J H¡${nQ>c H$mo AZwHy$b ñVa VH$ ~ZmE
working capital should be maintained at aIZm Mm{hE Š`m|{H$ BgH$s H$_r X¡{ZH$ J{V{d{Y`m| H$mo
optimum level because the shortage of working
capital may stop the routine activities, while amoH$ gH$Vr h¡, O~{H$ AË`{YH$ d{Hª$J H¡${nQ>c hmoZo go
the excessive working capital will reduce the bm^ H$_ hmo OmEJm&
profitability.
Net working capital refers to the amount ZoQ> d{Hª$J H¡${nQ>c H$m g§~§Y Cg am{e go h¡ Omo \$_©
which must be invested by the firm from its AnZo hr [agmog}g _| go bJmVr h¡ Š`m|{H$ dV©_mZ AgoQ²>g
own resources because the remaining portion H$m eof ^mJ dV©_mZ cm`{~{cQ>rO go \$m`ZoÝg {H$`m OmVm
of current assets is financed by current
liabilities. The net working capital also denotes h¡& ZoQ> d{Hª$J H¡${nQ>c \$_© Ho$ nmg CncãY ZoQ> {cpŠd{S>Q>r
the net liquidity maintained by the firm. H$mo ^r Xem©Vr h¡&
The concept of net working capital ZoQ> d{Hª$J H¡${nQ>c H$s g§H$ënZm {cpŠd{S>Q>r ñnï>
indicates the liquidity and suggests how the H$aVr h¡ Am¡a `h ~VmVr h¡ {H$ H¡${nQ>c g§~§Yr
working capital needs can be financed. Amdí`H$VmAm| H$mo {H$g àH$ma nyam {H$`m Om gH$Vm h¡Ÿ&
Generally, it is assumed that the level of current gm_mÝ`V… `h _mZm OmVm h¡ {H$ dV©_mZ AgoQ²>g H$m ñVa
assets should be twice that of the level of
current liabilities. However, it is also necessary dV©_mZ cm`{~{cQ>rO H$s VwbZm _| Xmo JwZm hmoZm Mm{hE&
that the quality of current assets should also hmbm±{H$ `h ^r Amdí`H$ h¡ {H$ AgoQ²>g H$s JwUdÎmm na ^r
be considered. A weak or negative liquidity {dMma {H$`m OmE& EH$ H$_Omoa `m ZoJo{Q>d {cpŠd{S>Q>r H$s
position may be harmful for the company. But pñW{V H$ånZr Ho$ {bE ZwH$gmZXm`H$ hmo gH$Vr h¡& bo{H$Z
excessive liquidity is also bad. It indicates mis- {cpŠd{S>Q>r H$s A{YH$ _mÌm ^r ~war hmoVr h¡& `h dV©_mZ
management of current assets. Therefore, it is AgoQ²>g H$m {_g_¡ZoO_|Q> Xem©Vr h¡& AV… Ag§VwbZ H$mo
the responsibility of financial manager to take gwYmaZo Ho$ {bE Vwa§V H$m`©dmhr H$aZm \$m`ZopÝe`c _¡ZoOa
prompt action to correct the imbalance. For
every firm, there is a minimum amount of net H$m Xm{`Ëd hmoVm h¡& àË`oH$ \$_© Ho$ {bE EH$ Ý`yZV_ am{e
working capital which is permanent. Therefore, H$s d{Hª$J H¡${nQ>c hmoVr h¡ Omo {H$ ñWm`r ahVr h¡& AV…
a portion of the working capital should be Am°Za H$s H¡${nQ>c, {S>~oÝMa, cm±J-Q>_© S>oQ>, {à\$aoÝg