Working capital is very important in every business because it is use to keep the day to day operation of an organization and helps to plan for the company needs.
Different organization with their different way of keeping their organization positively and the adoption of working capital has been one of it to help them maintain the fund operation for the growth of an organization.
Working capital is the current measure of efficiency and liquidity including the overall financial health of an organization. it differentiate between the company current asset and current liability which include the short term loan and account payable. It is not good for a business not to have a positive working capital because they won't be able to pay their short term liability because they will not have liquid asset.
Working capital have it's own importance in the growth of an organization and here are some of importance.
working capital helps an organization to meets their obligation, a business with sufficient working capital will not have any problem in paying their staffs and also helps to meet up with other short term obligations because the won't have any financial difficulty.
It is used to finance operation that helps the organization to plan how to grow the organization without sustaining debt by taking loan from bank or any other loan institute.
A positive working capital helps an organization to build their reputation and maintain a good image which will make it easy for them to get contract.
It also helps to earn a short term profit by putting the excess fund in a short term Investments.
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