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long term finance are finances used by a business more than one accounting year or it is the finance kept for future use of business.
Working capital are the money used for day-to-day expenses or day-to-day running of a business.These are used for short term use in the business.for example the expenses which have to be paid for a lorry driver for delivering goods to the company or business.
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What is the sources of working capital?
Also known as capital employed its the total long term finance injected in the business i.e. Long term debt + equity
Long term finance sources?
Following are long term finance source:Bonds issueDebenturesIssuance of share capital
Difference between working capital and working capital margin?
Working capital is a company's short term financial well being and efficiency. Working capital margin is a sum of the company's gross working assets over the long term.
The features of trade credit as a short-term source of Working Capital Finance?
Trade credit is the credit line given by a seller to a customer, which allows delay in payment for goods or services. Its features in terms of Working Capital Finance are availability and flexibility.
What is the importance of working capital?
Working capital is very important concept in finance. Working capital represents the funds available with the company for day to day operations. working capital finances the cash conversion cycle. company cannot survive with negative working capital which represents that the company has no funds for day to day operations Essentially working capital is the answer to the question: "How much short term funding do you need to operate this business?". Short term funding is important because, with long term funding already in place, the business still needs short term funding to operate. Without the short term funding, the business will go bankrupt. Another concept is net working capital which means surpuls of current assets over current liablities. a positive NWC is good for a company
What is fixed and working capital?
Fixed capital is something that is need for long term ...working capital is the capital or funds for managing and carrying out day to day operations. Apart from this a important point to note is that usually fixed assets or long term assets of the company are bought from fixed capital. Buying short term current assets from funds for long term would be illogical.
What are the long term sources of finance?
A business requires funds to purchase fixed assets like land and building, plant and machinery, furniture etc. These assets may be regarded as the foundation of a business. The capital required for these assets is called Fixed capital. A part of the working capital is also of a permanent nature. Funds required for this part of the working capital and for fixed capital is called long term finance. Various sources of long term finance are:1. Capital Market which includes stock market and bond market.2. Financial Institutions like IDBI, ICICI3. Investment institutions like mutual funds, UTI4. Leasing through banks or other sources5. Foreign institutions like World Bank6. By making collaborations with foreign companies7. From NRI's (Non Resident Indians)8. Retained profits
Is short term borrowing a source of working capital?
Yes companies has two types of source of working capital available short term as well as long term borrowing. Short term borrowings has less percentage of interest due to less risk then long term borrowings.
Should you borrow on a long-term basis or short-term basis to raise immediate capital?
immediate capital may be for short term (working capital) or long term ( for expansion) . For long term borrowing the process may take long time. so for immediate requirement i prefer only short term loan.
Why different sources of finance might be neededrevenue expenditure and capital expenditure?
this is beacuse revenue expenditure is for a short period of time therefore it wouldnt make sense for it to get a long term loan neither would it make sense it capital expenditure which is long term uses a short term method of finance
Sources of finance for fixed assets and working capital of a business?
What is fixed capital in real terms? This fixed capital is money that the company possesses but does not have in cash. This can be tapped into by the sale of these fixed asset items but usually, fixed asset items are vital for the running of businesses. Working capital Working capital is completely different from fixed capital and it has a different relevance when looking at a business. Working capital is the moment on a balance sheet that is constantly moving. These are all short term investments and the money is said to be working in the way that it is generating more money and more capital to be put back into the business.
An aggressive working capital policy has what characteristics?
An aggressive working capital policy has various characteristics. The main characteristic is having a high ratio of short-term debt to long-term sources of funds.
