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Educational materials for IPMAT and IIMB UG preparation
6 years, 8 months ago
6 years, 8 months ago
The working capital figure, which is also known as working capital, is defined as a company's current assets minus its current liabilities.
Examples of Changes in Working Capital
If a company's owners invest additional cash in the company, the cash will increase the company's current assets with no increase in current liabilities. Therefore working capital will increase.
If a company obtains a long-term loan to replace a current liability, current liabilities will decrease but current assets do not change. Therefore working capital will increase.
We can see Working Capital figure changing Balance Sheet configuration.
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