Working capital
AccountingCurrent assets minus current liabilities — the capital tied up in day-to-day operations.
In plain terms
Negative working capital is often excellent: customers pay you before you pay suppliers.
1492 terms
Glossary
Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
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Working capital change
AccountingThe movement in receivables, inventory and payables, adjusted against profit on the way to operating cash flow.
In plain terms
Where profit recorded but not collected disappears. Profit of ₹300 crore plus ₹120 crore of depreciation, less a ₹410 crore rise in receivables, leaves about ₹10 crore of operating cash.
Working capital limit
Fundamental analysisA sanctioned borrowing ceiling for day-to-day operations — cash credit, overdraft or a demand loan — typically reviewable periodically and repayable on demand.
In plain terms
A permission to borrow rather than a promise of funding, and it never appears on a repayment calendar because it has no maturity. It is worth least on the day it is needed most.
Business buffer
Market basicsWorking capital held to fund quiet months in a business with irregular income.
In plain terms
Not the emergency fund. Merging them means discovering during a bad quarter that the emergency fund is gone.
Drawing power
Fundamental analysisThe amount actually available under a working capital limit at a point in time, recomputed against stock and receivables after prescribed margins.
In plain terms
It is why a sanctioned limit contracts exactly when the business contracts. The ceiling stays where it was and the money that can be drawn against it falls with the inventory and the debtors.
Short-term borrowings
AccountingBorrowings presented as current liabilities — cash credit and overdraft, working capital demand loans, commercial paper, and the current maturities of long-term loans sitting alongside them.
In plain terms
Two very different things share this caption: money that was always meant to be rolled, and a long loan whose date has arrived. Read them as one number and you misread both.
Committed facility
Fundamental analysisA facility the lender is contractually obliged to fund for a defined period, as opposed to a limit that is reviewable and repayable on demand.
In plain terms
The distinction decides whether an undrawn limit belongs in a liquidity schedule at all. Most ordinary working capital limits in India are not committed, and a company that has arranged one will say so.
MSME dues
AccountingAmounts payable to suppliers registered as micro or small enterprises, which the MSMED Act, 2006 requires to be paid within the agreed period and in any case within 45 days, and which companies must disclose separately.
In plain terms
An overdue MSME balance is a tax item as well as a working capital one: delayed payment carries statutory interest, and the income tax law defers the deduction to the year of actual payment where the time limit is breached. If it is biting, it shows up by name in the tax reconciliation note.
Restated financial information
AccountingAlso called: Restated accounts, Restated financials
Financial statements in an offer document recast onto a single consistent accounting basis across the periods presented, and reported on by the auditors.
In plain terms
Built for comparability rather than for the original year’s reporting. It lets you set a rival’s margins and working capital beside a listed company on a like basis.