Which of the following is an example of working capital?MachineBuildingToolsRaw Materials (2024)

FAQs

Which of the following is an example of working capital?MachineBuildingToolsRaw Materials? ›

Raw materials and money in hand are called working capital. Unlike tools, machines and buildings, these are used up in production.

The raw materials and money in hand are known as working capital, which is used for the production of commodities. It is also called as current capital.

Fixed capital, comprising long-term assets like buildings and machinery, forms the foundation for sustained growth while working capital addresses short-term financial needs for day-to-day operations.

Raw materials and money are referred to as working capital.

What Is Working Capital? Working capital, also known as net working capital (NWC), is the difference between a company's current assets—such as cash, accounts receivable/customers' unpaid bills, and inventories of raw materials and finished goods—and its current liabilities, such as accounts payable and debts.

Regular working capital: This is the least amount of capital required to meet current working expenses under normal conditions. Some examples of this capital include salary and wage payments, materials and supplies, and overhead costs.

Fixed assets are not included in working capital because they are illiquid; that is, they cannot be easily converted to cash. Fixed assets include real estate, facilities, equipment and other tangible assets, as well as intangible assets like patents and trademarks.

Raw materials and money in hand are called working capital. Unlike tools, machines and buildings, these are used up in production.

Working capital is the difference between a company's current assets and current liabilities. 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.

Working capital in manufacturing refers to the difference between a company's current assets and its current liabilities. It is the amount of funds available for day-to-day operations and is essential for a manufacturing company to finance its production activities, manage inventory, and pay bills.

What are capital raw materials? ›

Also called commodities, raw materials include wood, metals like iron, or natural resources such as oil. Resources must have a few key qualities to be considered a capital resource. They must: Be a component in the manufacturing process and necessary for the process to produce a product.

Capital resources include money to start a new business, tools, buildings, machinery, and any other goods people make to produce goods and provide services.

Circulating capital: It is referred to the money capital used in purchasing raw materials. Usually the term working capital and circulating capital are used synonymously.

Sources of working capital

Long-term working capital sources include long-term loans, provision for depreciation, retained profits, debentures, and share capital. Short-term working capital sources include dividend or tax provisions, cash credit, public deposits, and others.

A well-run firm manages its short-term debt and current and future operational expenses through its management of working capital, the components of which are inventories, accounts receivable, accounts payable, and cash.

What is Working Capital? The liquidity available in a business to cover day to day expenses and commitments.

Raw materials are not Capital resources.

It is the basic material from which a product is manufactured after further processing. Not to be confused, the definition of Capital resources accounts for all the assets that aid the production process.

Raw materials do not come under fixed capital. Hence option D is the right answer. Fixed capital consists of assets that are not consumed or destroyed in the production of a good or service and can be used multiple times. Fixed capital refers to the investment of the enterprise in long term assets of the company.

Inventory is part of a company's working capital. Inventory is classified as current assets because it is typically consumed within a year as part of the production process. Inventory incurs warehousing costs and is considered opportunity cost.