Internal sources of working capital include Retained Earnings savings achieved through operating efficiencies and the allocation of Cash Flow from sources like Depreciation or deferred taxes to working capital. External sources include bank and other short-term borrowings, Trade Credit and term debt and Equity Financing not channeled into long-term assets.
15# Uses of Working Capital :
Funds
invested in a company's cash, Accounts
Receivable, Inventory,
and other Current
Assets (gross working capital); usually refers to net working
capital-that is, current assets minus Current Liabilities. Working capital
finances the Cash Conversion Cycle of a business-the time required to
convert raw materials into finished goods, finished goods into sales, and
accounts receivable into cash. These factors vary with the type of industry and
the scale of production, which varies in turn with seasonality and with sales
expansion and contraction.