Working Capital Practice Questions
For students, this article will be beneficial becuase students can find some practice questions, and can get answers by just directly messaging at hira@accountingdrive.com.
𝐓𝐲𝐩𝐞𝐬 𝐨𝐟 𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐂𝐚𝐩𝐢𝐭𝐚𝐥- 𝐆𝐫𝐨𝐬𝐬 𝐯𝐬 𝐍𝐞𝐭 𝐖𝐂, 𝐏𝐞𝐫𝐦𝐚𝐧𝐞𝐧𝐭 𝐯𝐬 𝐓𝐞𝐦𝐩𝐨𝐫𝐚𝐫𝐲 𝐖𝐂.
Looking puzzled! Why there are too many different types of working capital? why they are categorized so broadly? & most importantly
𝐓𝐲𝐩𝐞𝐬 𝐨𝐟 𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐂𝐚𝐩𝐢𝐭𝐚𝐥- 𝐆𝐫𝐨𝐬𝐬 𝐯𝐬 𝐍𝐞𝐭 𝐖𝐂, 𝐏𝐞𝐫𝐦𝐚𝐧𝐞𝐧𝐭 𝐯𝐬 𝐓𝐞𝐦𝐩𝐨𝐫𝐚𝐫𝐲 𝐖𝐂. Read More »
𝐇𝐨𝐰 𝐭𝐨 𝐂𝐚𝐥𝐜𝐮𝐥𝐚𝐭𝐞 𝐂𝐚𝐬𝐡 𝐂𝐨𝐧𝐯𝐞𝐫𝐬𝐢𝐨𝐧 𝐂𝐲𝐜𝐥𝐞 𝐢𝐧 𝟑 𝐄𝐚𝐬𝐲 𝐒𝐭𝐞𝐩𝐬.
Calculate cash conversion cycle in 3Steps. Step#1 Calculate Avg. Inventory, A/R and A/P. Step#2 Calculate DIO, DSO, DPO. Step#3 Calculate CCC.
𝐇𝐨𝐰 𝐭𝐨 𝐂𝐚𝐥𝐜𝐮𝐥𝐚𝐭𝐞 𝐂𝐚𝐬𝐡 𝐂𝐨𝐧𝐯𝐞𝐫𝐬𝐢𝐨𝐧 𝐂𝐲𝐜𝐥𝐞 𝐢𝐧 𝟑 𝐄𝐚𝐬𝐲 𝐒𝐭𝐞𝐩𝐬. Read More »
𝐇𝐨𝐰 𝐃𝐨 𝐂𝐡𝐚𝐧𝐠𝐞𝐬 𝐢𝐧 𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐈𝐦𝐩𝐚𝐜𝐭 𝐂𝐚𝐬𝐡 𝐅𝐥𝐨𝐰?
The “impact” relates to how the cash flow has changed when there is positive and negative fluctuation in working capital.
𝐇𝐨𝐰 𝐃𝐨 𝐂𝐡𝐚𝐧𝐠𝐞𝐬 𝐢𝐧 𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐈𝐦𝐩𝐚𝐜𝐭 𝐂𝐚𝐬𝐡 𝐅𝐥𝐨𝐰? Read More »
Cash Flow Statement- Format With Solved Example
Cash Flow Statement helps to track cash inflow and outflow. CFS has three main parts: operating, investing, and financing activities.
𝟒 𝐄𝐚𝐬𝐲 𝐒𝐭𝐞𝐩𝐬 𝐟𝐨𝐫 𝐂𝐚𝐥𝐜𝐮𝐥𝐚𝐭𝐢𝐧𝐠 𝐂𝐡𝐚𝐧𝐠𝐞s 𝐢𝐧 𝐍𝐞𝐭 𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐂𝐚𝐩𝐢𝐭𝐚𝐥
Calculate WC for the current and previous year. Calculate changes in Net Working Capital by subtracting Previous WC from Current WC.
𝟒 𝐄𝐚𝐬𝐲 𝐒𝐭𝐞𝐩𝐬 𝐟𝐨𝐫 𝐂𝐚𝐥𝐜𝐮𝐥𝐚𝐭𝐢𝐧𝐠 𝐂𝐡𝐚𝐧𝐠𝐞s 𝐢𝐧 𝐍𝐞𝐭 𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 Read More »
Working Capital Vs Current Ratio: Difference Explained With An Example
Working Capital is the leftover amount after paying operating expenses whereas the Current Ratio determines the efficiency of current assets over current liabilities.
Working Capital Vs Current Ratio: Difference Explained With An Example Read More »
𝟓 𝐁𝐞𝐬𝐭 𝐖𝐚𝐲𝐬 𝐭𝐨 𝐠𝐞𝐭 𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐂𝐚𝐩𝐢𝐭𝐚𝐥: 𝐓𝐡𝐞 𝟑𝐫𝐝 𝐎𝐧𝐞 𝐢𝐬 𝐀𝐦𝐚𝐳𝐢𝐧𝐠.
5 best ways to get working capital are Trade Credits, Invoice Factoring, Invoice Financing, Line of Credit, and Business Credit Cards.
𝟓 𝐁𝐞𝐬𝐭 𝐖𝐚𝐲𝐬 𝐭𝐨 𝐠𝐞𝐭 𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐂𝐚𝐩𝐢𝐭𝐚𝐥: 𝐓𝐡𝐞 𝟑𝐫𝐝 𝐎𝐧𝐞 𝐢𝐬 𝐀𝐦𝐚𝐳𝐢𝐧𝐠. Read More »
𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐚𝐧𝐝 𝐂𝐚𝐬𝐡 𝐂𝐨𝐧𝐯𝐞𝐫𝐬𝐢𝐨𝐧 𝐂𝐲𝐜𝐥𝐞: 𝐑𝐞𝐥𝐚𝐭𝐞𝐝 𝐨𝐫 𝐃𝐢𝐟𝐟𝐞𝐫𝐞𝐧𝐭 𝐓𝐞𝐫𝐦𝐬?
Working Capital and Cash Conversion Cycle are distinct terms and work together under the operating mechanism because of the same major items.
𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐚𝐧𝐝 𝐂𝐚𝐬𝐡 𝐂𝐨𝐧𝐯𝐞𝐫𝐬𝐢𝐨𝐧 𝐂𝐲𝐜𝐥𝐞: 𝐑𝐞𝐥𝐚𝐭𝐞𝐝 𝐨𝐫 𝐃𝐢𝐟𝐟𝐞𝐫𝐞𝐧𝐭 𝐓𝐞𝐫𝐦𝐬? Read More »
𝟓 𝐁𝐞𝐬𝐭 𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐌𝐚𝐧𝐚𝐠𝐞𝐦𝐞𝐧𝐭 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐞𝐬: 𝐇𝐨𝐰 𝐭𝐨 𝐌𝐚𝐧𝐚𝐠𝐞 𝐄𝐟𝐟𝐞𝐜𝐭𝐢𝐯𝐞𝐥𝐲
Five effective working capital management strategies are Cash Management, Inventory Management, Debtor’s Management, Creditor’s Management, and Short-term Debt Management.
𝟓 𝐁𝐞𝐬𝐭 𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐌𝐚𝐧𝐚𝐠𝐞𝐦𝐞𝐧𝐭 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐞𝐬: 𝐇𝐨𝐰 𝐭𝐨 𝐌𝐚𝐧𝐚𝐠𝐞 𝐄𝐟𝐟𝐞𝐜𝐭𝐢𝐯𝐞𝐥𝐲 Read More »
𝐍𝐞𝐠𝐚𝐭𝐢𝐯𝐞 𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐨𝐫 𝐏𝐨𝐬𝐢𝐭𝐢𝐯𝐞 𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐂𝐚𝐩𝐢𝐭𝐚𝐥: 𝐖𝐡𝐢𝐜𝐡 𝐢𝐬 𝐁𝐞𝐭𝐭𝐞𝐫?
While calculating working capital (WC), have you ever found a negative working capital? Or confused between positive working capital or
𝐍𝐞𝐠𝐚𝐭𝐢𝐯𝐞 𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐨𝐫 𝐏𝐨𝐬𝐢𝐭𝐢𝐯𝐞 𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐂𝐚𝐩𝐢𝐭𝐚𝐥: 𝐖𝐡𝐢𝐜𝐡 𝐢𝐬 𝐁𝐞𝐭𝐭𝐞𝐫? Read More »