WORKING CAPITAL MANAGEMENT
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Accounting and Financial Management for Bankers — JAIIB.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
What is working capital in the context of financial management?
Working capital refers to the funds required to meet day-to-day operational needs of a business, calculated as current assets minus current liabilities.
What is the concept of Gross Working Capital?
Total current assets of a firm without deducting liabilities.
What is the formula for Net Working Capital?
Net Working Capital = Current Assets − Current Liabilities. A positive value indicates the firm can meet its short-term obligations comfortably.
What is the Cash Conversion Cycle (CCC)?
Time taken to convert investments in inventory into cash flows.
What are the two concepts of working capital?
The two concepts are Gross Working Capital (total current assets) and Net Working Capital (current assets minus current liabilities).
What does the term 'window dressing' mean in working capital context?
Manipulating financial statements to improve apparent liquidity position.
What is the operating cycle in working capital management?
The operating cycle is the time taken to convert raw materials into cash through production, sales, and collection — also called the cash conversion cycle.
What is the First Method of Lending under the Tandon Committee?
Bank finances 75% of working capital gap; borrower contributes 25%.
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