gd morning sir/Madam
Can you please give me following questions of answer.?
1) what is the main difference between Current Assests and Fixed Assests?
2) working capital Management? why? which steps requried for working capital management at the statring day of the any type of business?
3) Ratio analysis? why?
(Note: 1,on the above questions of answer the following points are exculded)
1) object 2) theory 3) features
(Note :2,on the aove questions of answer the follwing points are inculded)
1) Practical oriented 2) aspects of business
From Germany, Stuttgart
1) Consider a firm to be an artificial person.
2) Liabilities are sources of funds for the artificial person.
3) Assets are application of funds by the artificial person.
Now answers to your questions:
1) Current assets are those assets needed for day to day operations like raw materials.
2) Fixed Assets are assets like machinery etc.
3) Working capital is Current Assets Less Current Liabilities.
4) Working capital management is important as it affects cash position of a firm.
5) Ratio Analysis is important for analysing health of a firm.
Please google simplifiedfinance and see the videos on Financial Statements.
From India , Pune
2. Working capital management specially prepared for :
A measure of both a company's efficiency and its short-term financial health. The working capital ratio is calculated as:
Working Capital = Current Assets- Current Liabilities
If a company's current assets do not exceed its current liabilities, then it may run into trouble paying back creditors in the short term. The worst-case scenario is bankruptcy.
Working capital also gives investors an idea of the company's underlying operational efficiency.
The right level of working capital depends on the industry and the particular circumstances of the business.
For example: Businesses that only sell services, and do not need to pay cash for inventory need a lower level of working capital. Businesses that take a substantial amount of time to make of sell a product will need a higher level of working capital.
It is important you work out the right level of working capital you will need. If the working capital is too: high - your business has surplus funds which are not earning a return; and low - may indicate that your business is facing financial difficulties.
Ratios are calculated from current year numbers and are then compared to previous years
it helps to pertaining index of companies growth
From India, Nasik