Why is working capital important for a business?
An example of an AI chatbot conversation about the significance of working capital in business operations.
Why is working capital important for a business?
Working capital is crucial as it ensures a business can meet its short-term liabilities and operational expenses.
Can you explain how it affects day-to-day operations?
Certainly! Adequate working capital allows a business to purchase inventory, pay employees, and cover other immediate costs.
What happens if a business has low working capital?
Low working capital can lead to cash flow problems, making it difficult to pay bills and potentially harming relationships with suppliers.
How can a business improve its working capital?
A business can improve working capital by optimizing inventory management, speeding up receivables collection, and extending payables.
Are there any metrics to measure working capital?
Yes, the current ratio and quick ratio are common metrics used to assess a company's working capital position.
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