sec.3:part 2:current assets holding period approach
What is the meaning of safety margin? Which is added in last to the working capital?
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Margin of safety or safety margin is the amount which company keeps for safety.
Let’s say company calculate that working capital needed is ₹1,00,000.
But this is just an estimate. So, sometimes, company keeps some extra amount (10% or so) in case of any emergency or if the actual need of working capital exceeds the estimate.
thank you
No problem