Working Capital

The amount of money a company has on hand, or will have, in a given year. Working capital is calculated by subtracting current liabilities from current assets. That is, one takes the value of all debts and obligations for the current year and subtracts that from the value of all cash and assets that might reasonably be converted into cash in the current year. This is a good measure of the short and medium-term financial health of a company, and may indicate by how much it can expand its operations without resorting to borrowing or another capital raising tactic. Working capital is also called operating assets or net current assets.

circulating capital

another way of describing WORKING CAPITAL which stresses how stock, debtors and cash circulate continuously through the business, as raw materials stocks are converted into finished goods stocks, sold to customers who become debtors, then are converted back to cash as the debtors pay, making funds available to buy yet more raw materials stock and so on.

References in periodicals archive

A 'circulating capital flow' leaves the raw materials industries and becomes 'goods-in-process' when it travels to the consumer goods industries.

If not, this would imply that an increasing scarcity of circulating capital is the phenomenon that could choke off the upswing.

A DEVELOPMENT OF THE THEORY OF THE RICARDO EFFECT

Where, ZKON--net circulating capital demand; OKZ--period of stock conversion in days; DSO--period of receivables inflow in days; ODP--period of deferred payment in days.

If the demand for net circulating capital is higher than the level of net circulating capital, the company financial liquidity may be threatened.

Stepped coupon bonds and restructuring factoring in relation to net circulating capital in companies in financial difficulty

Indeed, circulating capital (and jobs) conceivably might expand together with fixed capital.

In short, whereas conversion of circulating capital into machinery lowers domestic labor demand, capital exported abroad annihilates the demand altogether (Ricardo [1821] 1951, 397).

Ricardo versus Wicksell on job losses and technological change

Rather, the above quotation should be viewed as an indirect criticism of Smith's f-c distinction which, in Marx's opinion, harbored a confusion of "circulating capital" with "capital of circulation" [Marx, 1978, p.

Thus, Marx's critique of Ricardo for confusing constant with fixed capital, and variable with circulating capital, boils down to Marx's warning that what had been maintained by Ricardo et al should not be identified with what was to be maintained by Marx himself.

Different divisions of capital in Smith, Ricardo, and Marx

The growth rate of circulating capital is determined as in the Simple Model, except that equation (1) is now

Therefore the effect of these parameters of the fixed capital growth-rate function (24) are incorporated into (29) although it is formally identical with (27), the growth rate of circulating capital only.

Adam Smith's macrodynamic conception of the natural wage

The property of invariability of the circulating capital in the period means that the endowment of circulating capital goods is a datum.

This hypothetical property (not assumed by Walras, but determined by the logic of consistency), which may be more formally stated as the proposition that produced goods are not made available before the end of the period, provides a sound basis for the hypothesis of invariability of the circulating capital in the period.

A restatement of Walras' theories of capitalisation and money