The working capital, also called working capital, is the working capital , which, in a period of twelve months, is always financed. It is of vital importance in finance, the branch of the economy that is responsible for analyzing transactions, involving an asset or capital, which occur between people, companies or the State. It should be noted that, depending on the approach given to the study of current assets, its definition may vary; in one it is seen as the fund fed by permanent financing, while in another it is the surplus of the surplus resources of the company. From this, you can determine what the regular operation of a company would be like, usually within a short-term period.
Assets are all those resources, goods or rights that a company has, which in the long term can be converted into money. Liquidity, for its part, is the ability of these assets to be converted into cash, and it should be mentioned that this depends, to a large extent, on the profitability it has in the market. Current assets are those that, within a set time, generally 12 months, should be converted into money. Working capital behaves like the counterpart of current capital, that is, non-current capital, since it is not converted into cash in the 12 months already established.
Mathematically speaking, the circulating capital will always be the same; however, in finance they are given a different interpretation and applied in different areas of financing. According to the approach taken by non - current state capital, working capital, product of the formula: in working capital = active circulante- liabilities, representing the solvency margin of a company; the higher the current assets, the lower the bankruptcy margin of the institution. Other authors prefer to see working capital as the surplus or remnant of permanent resources, which are determined with the formula: working capital = permanent resources - fixed assets; Thus, the ability to cover short-term expenses of companies would be known.
