Abstract:
One of the main advantages of looking at the working capital
position is being able to foresee any financial difficulties
that may arise.
It reveals more about the financial condition of a business than almost any other calculation. It tells what
would be left if a company raised all of its short term reso
urces, and used them to pay off its short term liabilities. The
more working capital, the less financial strain a company
experiences. By studying a company's working capital, you
can clearly see if it has the resources necessary to expand interna
lly or if it will have to turn to a bank and take on debt.
Good management of working capital will generate
cash, will help improve profits and reduce risks.
