If you want to know what is working capital or its basics, I’ll request you to check this blog post. But here, in this article, you will see the practical side of working capital. We’ll see examples of real life companies and see what constitutes their woking capita. To get a clearer perspective of working…
I received a message from one of my readers. He wanted to get more clarity about the concept of working capital, and also about the ‘change in working capital.’ He is a person from a manufacturing background hence I thought to explain the topic using a related example. We’ll try to first understand the concept…
The objective of this article is to emphasize the need for maintaining basic liquidity and solvency levels for a financially healthy company. We’ll learn about liquidy vs solvency from the eyes of a stock investor. We’ll look at the concept and financial metrics that will help to quantify and comprehend a company’s liquidity and solvency…
The formula of working capital (WC) has two components, current assets, and current liabilities. Both are the numbers of the past. Though it is derived from the past numbers, the working capital use is in the future. This is the reason why it is a vital number in both corporate finance and valuation. Companies report…
Companies need cash to run their day-to-day operations. Working capital management focuses on factors that generate and consumes cash. A company must be capable of generating more cash than it consumes. Cash parked in the company’s bank account is not working capital. We will dig deeper to get a better understanding of the concept of working capital. What Is…
