Tuesday, 11 April 2017

Working Capital

This is the difference between current assets and current liabilities.

It is extremely important.

  • A business without sufficient working capital cannot pay its debts as they fall due. 
  • In this situation it might have to stop trading even if it is profitable.

Possible alternatives might include:

  • raising more capital,
  • taking out a long-term loan, or
  • selling some fixed assets.

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