INTRODUCTION
The primary aim of establishing or going into business is to optimize profit and as well as to ensure continuity of that business concern. When one person (sole trader ) of group of person (partnership of companies limited by shares or guarantee) intends forming a business entity he will need both fixed and current assets to facilitate a smooth take off, these fixed and current assets will by funded from both long term liabilities and current liabilities (or capital) as the case may be.
On formation, the business as an entity will be provided with fixed assets, such as building and premises, plant and machinery. Equipments, motor van etc. But form all indication we know and we see that these fixed assets itemized above cannot achieve the aforesaid aims of establishing the business. This is so because the fixed assets where not bought for the purpose of resale as a result any project cannot be directly accruable from its continuous stay.
From the foregoing, it is easily deduceable from it that the business as a going concern need some indispensable items or factors that will determine its profitability and its ability to withstand the test of time in a prevalent competitive environment
These indispensable items are operational and resolving in contrast with fixed capital and this is what we termed as the “”working capital”.
2.0 ADEQUANCY OF WORKING CAPITAL
In our previous chapter, we were made to understand that excess of current asset over current liabilities, and that the working capital is an indispensable factor that will keep an organisation in operation. Since the working capital is the life – block of any business (ie it can determine the business profit ability, continuity, competitiveness etc.) it is imperative to have sufficient amount of it (working capital ) in any organisation that aspire to meet its primary aim of establishment
Arrangement of funds for financing working capital requirements should be made by the manager. Whenever there is a need for working capital, arrangement should be made quickly for it. Similarly, if surplus funds arise, they should not be allowed to remain idle, but should be invested in short term maturing securities. The financial manager should have knowledge of the sources of working capital funds as well as temporarily invested.
Disclaimer: Note this academic material is intended as a guide for your academic research work. Do not copy word for word. Note: For Computer or Programming related works, some works might not contain source codes
CITE THIS WORK
(2014, 11). Adequacy Or Inadequacy Of Working Capital: Its Importance And Implication... ProjectStoc.com. Retrieved 11, 2014, from https://projectstoc.com/read/5010/adequacy-or-inadequacy-of-working-capital-its-importance-and-implication-2028
"Adequacy Or Inadequacy Of Working Capital: Its Importance And Implication.." ProjectStoc.com. 11 2014. 2014. 11 2014 <https://projectstoc.com/read/5010/adequacy-or-inadequacy-of-working-capital-its-importance-and-implication-2028>.
"Adequacy Or Inadequacy Of Working Capital: Its Importance And Implication..." ProjectStoc.com. ProjectStoc.com, 11 2014. Web. 11 2014. <https://projectstoc.com/read/5010/adequacy-or-inadequacy-of-working-capital-its-importance-and-implication-2028>.
"Adequacy Or Inadequacy Of Working Capital: Its Importance And Implication..." ProjectStoc.com. 11, 2014. Accessed 11, 2014. https://projectstoc.com/read/5010/adequacy-or-inadequacy-of-working-capital-its-importance-and-implication-2028.
- Related Works
- Fraud Detection And Control In The Payroll Department (a Case Study Of The Ministry Of Agriculture Enugu State
- Employee Participation In Decision Making And Organizational Commitment (a Case Study Of Imt)
- Performance Appraisal Of Junior Staff In Public Organizations (a Case Study Of National Electric Power Authority (n.e.p.a) Enugu District Office)
- Application Of Marketing Control Techniques In Manufacturing Firms In Enugu L.g.a Of Enugu State (a Case Study Of Emenite Limited Emene Enugu State)
- Unemployment Problems Amongst Graduates Of Higher Institutions (a Case Study Of Enugu Metropolis)
- The Effect Of Inventory Management On The Viability Of A Company
- The Prospect Of Human Resource Management In Enhancing Higher Productivity In A Construction Company (syntax Construction Company Nigeria Limited)
- Market Acceptability Of Locally Made Cosmetics Products (beauty Aids) In Nigeria A Case Study Of Female Consumers In Enugu Urban
- Solving Unemployment Problems Through Small Scale Business In Ugwunye Local Government Development Centre
- Problems Of Human Resources Management In Enugu State Government Parastatals (enugu State Broadcasting Service (esbs), Enugu)