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BRILLIANT’S Working Capital Management 127

Characteristics of Working Capital d{Hª$J H¡${nQ>c Ho$ bjU
Following are some characteristics of d{Hª$J H¡${nQ>c Ho$ Hw$N> bjU Bg àH$ma h¢:
working capital:
1. Short Life Span: Current assets like 1. N>moQ>m OrdZ MH«$: H¡$e, ~¢H$ ~¡b|g, {dH«$` `mo½`
cash, bank balance, marketable securities, {gŠ`y[aQ>rO, AH$mCÝQ> [agrdo~ëg Am¡a BÝdoÝQ>arO O¡go
accounts receivable and inventories, etc. all
H$aÝQ> AgoQ²>g N>moQ>o OrdZ MH«$ dmbo hmoVo h¢& BZH$m OrdZ
are short lived. Their life span does not go
MH«$ EH$ df© go A{YH$ Zht hmoVm& AV… d{Hª$J H¡${nQ>c H$m
beyond one year. So the working capital
usually has short life span. OrdZ MH«$ gm_mÝ`V… N>moQ>m hmoVm h¡&
2. Swift Transformation: Swift transfor- 2. erK« ê$nm§VaU: d{Hª$J H¡${nQ>c H$s EH$ Am¡a
mation of current asset into other form of _hËdnyU© {deofVm `h h¡ {H$ EH$ H$aÝQ> AgoQ> H$mo AmgmZr
current asset is another major feature of go Xygar H$aÝQ> AgoQ> _| n[ad{V©V {H$`m Om gH$Vm h¡Ÿ&
working capital. The cash is utilized to procure
raw material, raw material is transformed into H$ÀMm _mb IarXZo _| H¡$e H$m Cn`moJ hmoVm h¡, {\$a `h
work in progress and then finished products H$ÀMm _mb dH©$-BZ-àmoJ«og _| ~Xb OmVm h¡ Omo {H$ ~mX _|
which is usually sold on credit and creates V¡`ma _mb ~Z OmVm h¡& {\$a `h _mb H«o${S>Q> na ~oMm
accounts receivable which after collection are OmVm h¡ Am¡a [agrdo~c AH$mCÝQ> _| ~Xb OmVm h¡ Omo àmá
converted back into cash. Operating cycle is hmoZo na nwZ… H¡$e _| ~Xb OmVo h¢& Am°naoqQ>J gm`H$b ^r
nothing but a transformation cycle of various
current assets into other forms of current Am¡a Hw$N> Zht ~pëH$ {d{^Þ dV©_mZ AgoQ²>g H$m EH$ ê$n
assets. go Xÿgao ê$n _| ~XbZo H$m gm`H$c hr h¡&
3. Short-term Focus: The other significant 3. AënH$mcrZ \$moH$g: d{Hª$J H¡${nQ>c H$m Xÿgam
feature of working capital is its attention on _hËdnyU© bjU CgH$m em°Q>-Q>_© \$m`ZoÝg na Ho$pÝÐV
the short-term financial position. The entire hmoZm h¡& nyam Ü`mZ em°Q>©-Q>_© AWm©V² gm_mÝ`V… EH$ df© _|
focus is on the procurement and management
of assets in the short run i.e. usually one year. AgoQ²>g H$s IarXr Am¡a _¡ZoO_|Q> na Ho$pÝÐV ahVm h¡&
4. Repetitive and Frequent: Working 4. nwZamd¥{Îm Ed§ {ZaÝVaVm: d{Hª$J H¡${nQ>c _¡ZoO_|Q>
capital management involves repetitive and _| Am°naoqQ>J gm`H$c _| ~VmE AZwgma J{V{d{Y`m| H$s
frequent activities as explained in operating
nwZamd¥{Îm Ed§ {ZaÝVaVm hmoVr ahVr h¡&
cycle.
5. Liquidity: The essence of 5. {cpŠd{S>Q>r: d{Hª$J H¡${nQ>c
working capital management is Characteristics of _¡ZoO_|Q> H$m gma Bgr _| h¡ {H$ {~OZog Ho$
in providing liquidity all the time Working Capital Xm¡amZ {cpŠd{S>Q>r H$mo Bg àH$ma CnbãY
in business in such a way that
1. Short Life Span H$am`m OmE {H$ Z Vmo [añH$ A{YH$ ~‹T>o
neither the risk is very high nor
2. Swift Transformation Am¡a Z hr BÝdoñQ>_|Q> na bm^ _| H$_r
the return on investment should
3. Short-term Focus AmE&
fall.
4. Repetitive and Fre-
6. Inter-relation among 6. AgoQ²>g _| A§Vg©å~ÝY… My±{H$
quent
Assets: As the current assets are 5. Liquidity H$aÝQ> AgoQ²>g Vrd«Vm go EH$ ê$n go Xÿgao
swiftly transformed into other 6. Inter-relation among ê$n _| ~XbVr h¢ AV… do EH$-Xÿgao go
forms of asset so they are also Assets g§~Õ ^r hmoVr h¢& {H$gr EH$ H$aÝQ> AgoQ²>g