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Alternative Perspectives on Working Capital
By InvestingNook  •  February 16, 2015
One of my module lecturers happen to come from corporate banking background which involves a lot of credit and loan approvals for companies. She recently shared her take on working capital which I thought is worth sharing because it contradicts with conventional wisdom. It will be interesting to hear what others think of it.

What is working capital?

Working capital is a financial metric which represent operating liquidity available to a business. It is calculated as current assets minus current liabilities. Liquidity management is a vital aspect of a company – the conventional wisdom is that a positive working capital means sufficient liquid assets are able to be converted to cover short term funding requirements (current liabilities), serving as a positive indicator of strong liquidity. While current assets and current liabilities include a wide range of accounts depending on the nature of the business, accounts receivable, inventory and accounts payable ......
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By InvestingNook
As Co-Founder and Fund Manager of Heritage Global Capital Fund, we started InvestingNook as a website dedicated to sharing the knowledge of value investing – allowing our readers achieve an edge over the markets with the knowledge of value investing.
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