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capital solcency



In general capital can be interpreted as anything that can be empowered to generate benefits, profits, or profits in an economic activity. In another sense, capital is also called a resource, where resources can be seen from two sides, namely the management side (where management means) and the economic side (production factor)

Working capital management is an effort to manage continuously and maintain the balance of fulfilling capital needs and their use in company activities (to produce goods / services) at one production cycle or in a certain period. The management referred to here is the management of the structure of current assets, current debt, overall assets, or overall capital to generate benefits and profits.

Basically the need for working capital is the fulfillment of short-term funding needs, working capital management includes the management of company liquidity which then involves managing company investment in current assets and utilizing current liabilities. There are two basic definitions and working capital, namely:

a. Permanent working capital
Is the minimum amount that must be available so that the company can run smoothly without financial difficulties. Working capital is further divided into two:

1. Primary working capital (primery working capital) is the minimum amount of working capital available to the company to ensure the continuity of the company.

2. Normal working capital, which is the amount of working capital needed to carry out normal production area.

b. Variable working capital

Is a working capital in which the amount of working capital depends on seasonal activities and outside ordinary activities. Variable working capital can be distinguished:

1. Seasonal working capital (seasonal working capital), which is working capital whose amount changes due to seasonal fluctuations.

2. Cyclic working capital, that is, working capital whose numbers change is caused by fluctuations in the conjuncture.