Source of Working Capital
The need for working capital is absolutely provided by the company in any form. Therefore, to meet these needs, working capital sources are needed which can be sought from various available sources. However, in the selection of working capital sources, the profit and loss of working capital must be considered. This consideration needs to be done so as not to burden the company in the future or it will cause unwanted problems.
Sources of funds for working capital can be obtained from decreasing the amount of assets and increasing passive. Here are some sources of working capital that can be used, i.e
1. Company operating results
The results of the company's operations mean the income or profits obtained in a certain period. Revenues or profits earned by the company plus depreciation. For example profit reserves or earnings that have not been shared. As long as the profits have not been shared by the company and the shareholders have not taken or not, this will increase the company's working capital. However, working capital is only temporary in a relatively short amount of time.
2. Advantages of selling securities
Profits from selling securities can also be used for working capital purposes. The big advantage is the difference between the purchase price and the selling price of the securities. However, on the contrary if you are forced to sell securities at a loss, it will automatically harm working capital.
3. Sale of shares
The seller's intention is that the company releases a number of shares it still has to sell to various parties. Proceeds from the sale of these shares can be used as working capital.
4. Sale of fixed assets
Sale of fixed assets means fixed assets that are less productive or still unemployed. And the results of this sale can be used as cash or receivables at the selling price.
5. Bond sales
Bond sales mean that the company issues a number of bonds to be sold to other parties. The proceeds of this sale can also be used as working capital, although the proceeds from the sale of bonds are prioritized for long-term corporate investment.
6. Obtain a loan
Obtaining a loan means to obtain a loan from a creditor, especially a short-term loan, specifically for long-term loans can also be used, it's just that long-term designation is usually used for investment purposes. In its loan practice, especially from the banking sector, there is a specific requirement for use as working capital, although it does not add to current assets.
7. Grant funds
Grant funds, which means the acquisition of grant funds from various institutions, can also be used as working capital. These grants are usually not charged as much as loans and there is no obligation to obtain them.
From the description above we can conclude that in general the increase and decrease in working capital is caused by
1. An increase in capital (increase in owner's capital or profits)
2. There is a reduction in fixed assets (sale of fixed assets)
3. The existence of additional debt
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