Importance of Working Capital

Topics: Economics, Business, Asset Pages: 1 (288 words) Published: October 29, 2011
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The Importance of Working Capital

Working capital measures the liquid assets to see what is available to build the business. The number let you know if you are positive or negative it all go on how much the companies are in debt. The companies with working capital will be more successful but with the companies that are lacking the funds that are necessary for growth would be negative working capital. The importance of budgeting you have to successful plan financial, have control for any business to run smoothly. They must have adequate level of working capital, which is the business heart. Capital is referred to as the main difference between present property and current liabilities property is essentially something that could be transformed into money in a comparatively short time: including inventory, notes receivable, and prepaid expenses. Liabilities are accounts payable and other things that are owed. In case a business proprietor miscalculates the significant capital projection the possibility implications would be the inability to meet obligations to be able to vendor, providers, and stuff I as a business owner look at myself, to see how much money I could invest of my own. If I do not have enough of my own personal capital, I would look to sell or investor. There are many sources of capital for the small business with good potential. However, there is no substitute for putting your financial assets on the line in starting your own business. Securing capital for any new business will require well-developed business plans, financial projections and knowledge of sources of financial support. However, like any small business person, commercial lenders are also in business for profit. (Jim McConnon, Extension business and economics specialist).
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