Concept of Working Capital Management: There are two concepts of working capital viz.quantitative and qualitative. Some people also define the two oncepts as gross concept and net concept. According to quantitative concept, the amount of working capital refers to ‘total of current assets’.
What we call current assets? Smith called, ‘circulating capital’. Current assets are considered to be gross working capital in this concept. The qualitative concept gives an idea regarding source of financing capital. According to qualitative concept the amount of working capital refers to “excess of current assets over current liabilities.” L.J. Guthmann defined working capital as “the portion of a firm’s current assets which are financed from long–term funds.” Click here to read more…
