Working capital is also known as net working capital is a financial metric which represent the amount of day-by-day operating liquidity available to a business. Along with fixed assets such as plant and equipment, working capital is measured a part of operating capital. It is calculated as current assets less current liabilities. A company can be capable with assets and profitability, but short of liquidity, if these assets cannot readily be converted into cash.
When current assets are less than current liabilities, an entity has a working capital deficiency also called a working capital deficit.
When current assets are less than current liabilities, an entity has a working capital deficiency also called a working capital deficit.
1 comment:
...in which case you will probably want to look into working capital loans. Without any working capital at all, your business is sure to go under.
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