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Thursday, 12 April 2018

5 Prerequisites to Determine Your Working Capital

When you are running your own business, you need to keep a track of the working capital. But, you may have to handle different activities and responsibilities such as sales, production, admin, etc. Each of these involves immense finance management, for which you must have working capital. To handle the situation, engineer loan can be of real help.

How will you determine your working capital needs?

There are two main factors of a company that determine the working capital needed.
Sales Revenue- One of the major income sources is the sales revenue. The amount of money you generate by selling the products. This revenue is the basic income and the main source of your expenses. More revenue you generate will ultimately results in good productivity.


Rent- Your manufacturing company have empty storage houses which can be given out on rent to other companies to bring an extra amount of income for the company.
Investments- It is the secondary source of income. If you have a small or medium-sized firm, then you are tend to make investments in mutual funds, equity or real estate. Expenditure
Stock Storing- Producing goods in a company involves inventory with higher expenses and lower incomes. It takes time to sell inventory and get payments.
Salaries- Employees must be well paid. Salaries of the employees are fixed expense, whereas the payments to the freelancers and part-timers are variable expense.
Raw Materials- Liquid cash or credit is required every time to keep the process going as purchasing raw materials is a non-stop cycle. Even if your revenue payments are late, you have to manage these finances.

To know more, read:
Engineers: Here’s How To Determine And Manage Your Working Capital Needs

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