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Dangers of deficiency of working capital
· It may lead to business failure
· The firm cannot take advantage of new opportunity or adopt change
· Trade discount will be lost
· Cash discount will be lost
· Financial reputation will be lost
· Creditors may apply to court for winding up
· It affects dividend policy adversely
· The company cannot utilize its fixed assets properly
Dangers of Excessive working capital
· Excessive working capital means idle funds in the business which gives no profit. Thus the rate of return falls.
· The value of share may fall due to lower rate of return on investment.
· Efficiency of management may be declined.
· It may lead to speculation among the public
· Increased bad debt and wastage
What else can I help you with?
What is the optimum working capital?
Optimum working capital is that point where working capital is neither short from requirements nor excess working capital available at any time during fiscal year.
What type of account is paid in capital in excess of par?
Paid in capital in excess of par is called "Share premium account"
Is the excess of current assets over current liabilities is called working capital?
true per my accounting book these wiki answers have helped me pass my tests!!
What type of account is paid-in capital in excess of par?
additional paid in capital
Capital paid in excess of par common stock?
Capital amount paid for excess of par value of common stock is called "Share premium amount" which is also part of capital of business.
What is the optimum working capital?
Optimum working capital is that point where working capital is neither short from requirements nor excess working capital available at any time during fiscal year.
What is optimal working capital?
Optimal working capital is that point where exact amount of working capital is available to run day to day activities and there is no excess or shortage of working capital at any point.
What shall be the firm repercussions if a firm has paucity of working capital and excess of working capital?
A paucity of working capital can lead to cash flow issues, hindering a firm's ability to meet short-term obligations and potentially resulting in insolvency. Conversely, an excess of working capital may indicate inefficiency, as funds that could be invested or used for growth are tied up in unproductive assets. Both scenarios can negatively impact a firm's profitability and competitiveness in the market. Effective management of working capital is essential to ensure financial health and operational efficiency.
working capital?
form_title=Working Capital form_header=Stay competitive in a growing market by obtaining working capital financing for your business. Total financing amount needed?*= _Enter Amount[50] What is your annual revenue?*= _Enter Amount[50] How long have you been in business?*= _[50] How would you rate your credit?*= {Poor, Fair, Good, Very Good, Excellent}
What type of account is paid in capital in excess of par?
Paid in capital in excess of par is called "Share premium account"
Managing short term asset and liabilities is sometimes called ------- management?
Management of short term assets (current assets) and short term liabilities (current liabilities) is commonly known as working capital management.Working capital is a requirement of funds to meet the day to day working expenses. In a simple term working capital is an excess of current assets over the current liabilities. In working capital management we focus more on receivables management, cash management and inventory management etc. Proper way of management of working capital is highly essential to ensure a dynamic stability of the financial position of an organization.
What are the potential drawbacks of having excessive working capital in a business?
Having excessive working capital in a business can lead to inefficiencies and reduced profitability. It may indicate that the company is not effectively utilizing its resources, which can result in missed investment opportunities and lower returns. Additionally, excess working capital tied up in inventory or accounts receivable can increase carrying costs and reduce overall liquidity.
Is the excess of current assets over current liabilities is called working capital?
true per my accounting book these wiki answers have helped me pass my tests!!
What type of account is paid-in capital in excess of par?
additional paid in capital
Capital paid in excess of par common stock?
Capital amount paid for excess of par value of common stock is called "Share premium amount" which is also part of capital of business.
What are the dangers of a tummy tuck and liposuction?
The main dangers of a tummy tuck and liposuction are infection. All surgeries carry this risk. In addition, you can get scarring, and excess skin, which might have to be removed by another operation.
In the management of working capital what objectives must be achieved?
In managing working capital, the primary objectives include ensuring liquidity, maintaining operational efficiency, and optimizing profitability. Liquidity ensures that the business can meet its short-term obligations without financial strain. Operational efficiency involves managing inventory and receivables effectively to minimize excess costs. Lastly, optimizing profitability focuses on balancing the investment in working capital to maximize returns while minimizing costs associated with financing and holding inventory.
