What are the types of working capital Class 12?
Emma Miller
Updated on December 29, 2025
Examples of current assets are:
- Inventories like raw materials, work-in-progress, stores and spare parts, finished goods.
- Sundry Debtors (net of provision)
- Short-term investment or marketable securities.
- Short-term loans and advances.
- Bills receivable or accounts receivable.
- Pre-paid expenses.
- Accrued Income.
How many types of working capital Mcq are there?
All assets should be financed with permanent long term capital. Temporary current assets should be financed with temporary working capital. Permanent current assets should be financed with permanent working capitals. Long term assets should be financed from long term capital.
What is the role of working capital?
Working capital is the money used to cover all of a company’s short-term expenses, which are due within one year. Working capital is used to purchase inventory, pay short-term debt, and day-to-day operating expenses. Working capital is critical since it’s needed to keep a business operating smoothly.
What is the amount of working capital?
Working capital is calculated by taking current assets and deducting current liabilities. For instance, if a company has current assets of $100,000 and current liabilities of $80,000, then their working capital would be $20,000. Common examples of current assets include cash, accounts receivable, and inventory.
What is the working capital ratio?
The working capital ratio is calculated simply by dividing total current assets by total current liabilities. For that reason, it can also be called the current ratio. It is a measure of liquidity, meaning the business’s ability to meet its payment obligations as they fall due.
What’s a good working capital ratio?
What’s a Healthy Working Capital Ratio? Anything in the 1.2 to 2.0 range is considered a healthy working capital ratio. If it drops below 1.0 you’re in risky territory, known as negative working capital. With more liabilities than assets, you’d have to sell your current assets to pay off your liabilities.
