Working Capital
Funds used for managing daily operating expenses and short-term debts.
Detailed Description
Working Capital
What is the formula for calculating working capital?
Working Capital = Current Assets - Current Liabilities
What does a positive working capital indicate?
A positive working capital indicates that a company has sufficient assets to cover its liabilities.
What are the two main types of working capital?
The two main types of working capital are permanent working capital and temporary working capital.
How does the working capital ratio help investors?
The working capital ratio helps investors evaluate a company's financial health by analyzing its liquidity.
What are some consequences of insufficient working capital?
Insufficient working capital can lead to cash flow problems, inability to pay suppliers, and potential business insolvency.