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” Similarly, FDIC Chairman Bair stated, “f you have a situation where you don’t think that policy has been applied, I want to know about it, because we’re really trying very hard not just to articulate these policies in Washington, to make sure they are followed in the field.
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Thus, by calculating the working capital, a business's shortcomings can be brought out, and the required corrective actions can be taken. There are four main financial requirements of a business, namely, working capital, fixed assets, marketing costs, and a contingency fund. The financial management for a business involves managing all these in an efficient manner. Working capital is the amount of money that a company has to carry on with its daily operations. To determine working capital requirement, let's first learn how to calculate working capital. Working Capital CalculationA company has two kinds of assets namely fixed assets, such as property and machinery, and current assets. The current assets of a company are those which will be used up within a single fiscal year. They include cash in hand, cash at bank, accounts receivable, pre paid expenses, inventory, and short term investments. Current liabilities are those which have to be settled in cash within the current fiscal year. They include all the accounts payable pertaining to goods and services, including short term loans payable within one year. Working capital is the difference between the current assets and the current liability.