Efficient management of working capital is essential for the success of any business. After all, it is the basis for all of the company’s financial decisions .
In addition to providing financial stability, calculating this calculate working capital helps with the analysis of the business’s financial performance, providing a broader view of the company.
For these analyses to be correct and bring results to the company, it is important to understand what it is for and how to calculate working capital. This value , continue reading in the next lines.
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What is working capital for?
In general, working capital has the singapore whatsapp number data of balancing finances and ensuring a healthier cash flow . After all, it is possible to understand the real situation of the company in a given period.
Thus, it can meet the company’s needs in times of decline, or it can serve as an incentive for future investments . Therefore, in general, working capital serves to:
- Assist in paying suppliers;
- Make payments for the company’s fixed expenses ;
- Serve as financing for customers who decide to take out installment accounts, maintaining the company’s cash flow;
- Buy and keep stocks up to date.
Relationship between working capital and cash flow
The calculation of working the wise based messages has a direct impact on the recurrence of financial transactions . In addition to being a strong indicator of the organization’s growth, it can represent the need for changes in the business plan.
After all, if the business is having more expenses than profits, it may be necessary to raise external resources or invest in new practices in the company – such as rethinking products, cutting costs or creating offers.
What factors negatively impact the company’s working capital?
Although the idea is to maintain germany phone number working capital, there are some factors that can negatively impact it . After all, sales can be cyclical and times of low sales can directly affect the company’s finances.