Working capital is a company’s available funds for its day-to-day operations. It is current assets minus current liabilities. A company’s working capital is affected and assessed by its cash position, inventory, sales, accounts receivable, accounts payable, short-term debt due, inventory management, debt management, revenue collection, and payments to suppliers.
How much working capital a business has is a measure of its financial health and performance, because it determines its ability to operate on a daily basis. The more working capital a company has, the more it can improve, grow and expand its operations. Vice versa, the less working capital a company has, the less it is able to improve, grow and expand its operations; such a development is a threat to its very existence in the medium to long-term.
Even a profitable company can fail if it does not manage its working capital effectively. Working capital is also variously called net current assets and current capital.« Back to Glossary Index
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Firm Gains gave me confidence with detailed advice and support. I would recommend their services to other entrepreneurs seeking to buy a business.Mr T Washington , Founder
I found it much easier to get my head around a business sale this way than talking to my accountant. You speak a language I understand!
Even though the whole process of selling seems daunting, I’ve got more confidence that I’m heading in the right direction.Mrs T Boothe , Founder
Thank you for your email and the excellent advice provided earlier this week. It was immensely helpful and has helped me to plan my future direction for the practice.
I would have no problem whatsoever in recommending your services in the future.Mr & Mrs Halldron , Co-Owners
Firm Gains were recommended to me and I was not disappointed. They were efficient, helpful and effective responding quickly to my request with all the facts that were needed to ensure a stress-free dialogue with our buyer.
What really helped was the advice over and above the valuation, which was immensely valuable and gave me the confidence to proceed. I would not hesitate in recommending them.Mr C Waite , Founder
We found the advice invaluable, which was clear and concise and felt your firm had a good handle on market trends and business sectors.
With also the backup of the secondary services, there was a feeling you had all bases covered if we wanted to proceed with our exit via Management Buy Out (‘MBO’).Mr D Wills , Director
Thank you for your advice. I was just about to sign up to the wrong kind of business agent for a company of our size, but read your post just in time.
I found a more serious partner, with experience in our industry and we’re already using the same language.Mr F Summerscale , Managing Director
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Firm gains understood our situation quickly and clearly and were anything but ‘pushy’. Refreshing compared to what we’d experienced before.Mr C Hutcheson , Managing Director