ENTREPRENEURSHIP

Detailed explanation-1: -Working capital is used to fund operations and meet short-term obligations. If a company has enough working capital, it can continue to pay its employees and suppliers and meet other obligations, such as interest payments and taxes, even if it runs into cash flow challenges.

Detailed explanation-2: -Working capital affects many aspects of your business, from paying your employees and vendors to keeping the lights on and planning for sustainable long-term growth. In short, working capital is the money available to meet your current, short-term obligations.

Detailed explanation-3: -Your new working capital needs equals the change in Accounts Receivable plus Inventory minus Accounts Payable. For our example, if you project to grow your sales from $500, 000 to $700, 000, you will need additional working capital of $21, 496.

Detailed explanation-4: -Working capital is the money used to cover all of a company’s short-term expenses, which are due within one year. Working capital is the difference between a company’s current assets and current liabilities.