Know about the Finance and Investments Terms

Working capital is referred to as the financial investment used to maintain day-to-day operations in a business. 

To calculate working capital you are required to find the difference between your company’s current asset and the company’s current liabilities. 

The significant components of the current asset of a company can be –

• The present liquid currency 
• Expenditures made in advance
• Receivable amount
• The inventory of stock

The significant components of the current liabilities of a company can be –

• Due payments
• Short-term debts
• Unpaid expenditures

The working capital formula that you can use to calculate your working capital is – 

Working capital = Current asset – current liability 

For example, 

Asset

• Present cash in hand = Rs. 1.5 Lakh
• Expenditures made in advance = Rs. 50,000 
• Receivable amount = Rs. 1 Lakh 
• Inventory = Rs. 1 Lakh 

Total = Rs. 4 Lakh 

Liability 

• Due payments = Rs. 50,000
• Short-term debts = Rs. 1 Lakh 
• Unpaid expenditures = Rs. 50,000

Total = Rs. 2 Lakh 

Hence, your working capital will be (current asset – current liability = Rs. 4 Lakh – Rs. 2 Lakh) Rs. 2 Lakh. 

To keep proper cash flow in your organisation and regulate working capital you can avail business loans from NBFCs like Bajaj Finserv. 

On their advances, you can enjoy a substantial loan amount, flexible tenor, pre-payment facilities, instant approval, the quick disbursal and other lucrative benefits. 

While you avail such advances make sure that you opt for lenders offering lower business loan interest rates to keep the cost of your loan low and to reduce the burden on your pocket.