Question
In: Finance
Discuss any two key sources of financing a manufacturing firms working capital (4 marks)
- Discuss any two key sources of financing a manufacturing firms working capital
Solutions
Expert Solution
Answer : Working Capital is the amount of Working Capital which is required to carry on day to day operation of Business.Working Capital cycle is the time taken to convert working capital in cash. Meanwhile every business require funds to manage its day to day operations . For a manufacturing Firm's Working capital can be obtained through :
(1.) Invoice Finance : Invoice financing is one of the way to finance working capital by releasing invoice immediately when it is issued. It is very important source of Finance for manufacturing firms to manage working capital needs effectively.
(2.) Overdraft : A overdraft is an type of credit arrangement which allows a business to withdraw beyond the balance in the account . This is one of the important source of finance through which manufacturing concerns may obtain funds for its working Capital.
These are two key sources of financing used by a manufacturing firms for working capital.
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