answersLogoWhite

0

working capital is current assest minus current liabilities ...when working capital become negative that means that urrent liabilities is more than current assets ...in this case the organization could face bancruptcy

User Avatar

Wiki User

15y ago

What else can I help you with?

Related Questions

Can a company operate with negative working capital?

yes, a company can operate with negative working capital. the problem of negative arises when the current liablities exceed current assets. there are apporoximately 34 companies which have negative working capital, it includes bharti airtel also


Which company have negative working capital?

Banks for example


Could a firm have negative working capital and still be in great financial shape?

Some companies can generate cash so quickly they actually have a negative working capital.Some extremely efficient companies, such as Wal-Mart, can have negative working capital because they sell goods on the shelf faster than they pay the vendor for the merchandise


Working capital formula?

The formula for calculating working capital is: Working Capital = Current Assets - Current Liabilities. It represents a company's ability to cover its short-term obligations with its current assets. A positive working capital indicates that a company has enough assets to cover its liabilities, while a negative working capital may suggest liquidity issues.


Is Negative Working Capital good or bad?

Negative working capital is good if the following conditions are satisfied : 1.Payment of all short term liabilities on time 2.Good sales and profit margin If the above two conditions are fulfilled, the working capital is funded by cash profits generated from normal operating cycle and there is no strain on payment of liabilities.


Explain the concept of working capital?

Working capital (also known as net working capital) is a financial metric which represents the amount of day-by-day operating liquidity available to a business. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. It is calculated as current assets minus current liabilities. A company can be endowed with assets and profitability, but short of liquidity, if these assets cannot readily be converted into cash.


What are the determinate of working capital?

conclusion of determinant of working capital


What is working capital?

A measure of both a company's efficiency and its short-term financial health. The working capital ratio is calculated as:Positive working capital means that the company is able to pay off its short-term liabilities. Negative working capital means that a company currently is unable to meet its short-term liabilities with its current assets (cash, accounts receivable and inventory).Also known as "net working capital", or the "working capital ratio". By Muhammad Ahmed KasiCalculation formula: Net Working Capital = Current Assets minus Current LiabilitiesCurrent asset is also called as Working capital, also known as Gross working capital or GWC, is a financial metric which represents operating liquidity available to a business.Working capital might mean: shows the portion of a firm's total assets belonging to the firm's owner. The every-day capital of business that is used in trading operations that can be calculated as the difference in current liabilities and current assets is known as working capital.


What is the negative effect of a firm's limited capital?

negative effects of a firm limited capital


What is a a working capital?

WORKING CAPITAL STATEMENT (WCS) is part of the financial statements' "Statements of Cash Flows or Changes in Financial Position." The WCS normally includes sections covering: Sources of Working Capital, Uses of Working Capital, and Working Capital Changes.


What is the optimum working capital?

Optimum working capital is that point where working capital is neither short from requirements nor excess working capital available at any time during fiscal year.


What is optimal working capital?

Optimal working capital is that point where exact amount of working capital is available to run day to day activities and there is no excess or shortage of working capital at any point.