What Financial Decisions Can Be Made Based On Working Capital?

It means that that bally tech can reuse the earning of Rs.26.96 out of its revenue of Rs.100. So if the company has a revenue of Rs.1,00,000, it can make use of Rs.26,960 for making any investment which creates a revenue income for the company. If the working capital % is determined at the end of every 6 months then, the after doing the above calculation, the company can decide to plan to make use of the money, viz., whether to invest, or whether any new purchases can be made, or whether if huge amount is available then, whether it can make any capital expenditure or whether it can clear any liability, etc.. can be judged. This is used as a parameter to take a decision. Read ratio analysis for further info on how each ratio helps to take a good decision.. hope I have cleared your doubt.

It means that that bally tech can reuse the earning of Rs.26.96 out of its revenue of Rs.100. So if the company has a revenue of Rs.1,00,000, it can make use of Rs.26,960 for making any investment which creates a revenue income for the company. If the working capital % is determined at the end of every 6 months then, the after doing the above calculation, the company can decide to plan to make use of the money, viz., whether to invest, or whether any new purchases can be made, or whether if huge amount is available then, whether it can make any capital expenditure or whether it can clear any liability, etc.. can be judged. This is used as a parameter to take a decision. Read ratio analysis for further info on how each ratio helps to take a good decision..