Working Capital (WC) refers to the cash a business requires for meeting its day-to-day operational expenses like financing the conversion of raw materials into finished goods, salaries, wages, payment of bills, and others. WC is a must for every business. A business cannot survive and run without adequate working capital. WC is the lifeblood of every business organization. Business firms cannot make progress without adequate working capital. Inadequacy of WC will mean a shortage of raw materials and other inputs necessary for production, whereas excess working capital extra cost in terms of interest and other charges to the lending bank. It is therefore imperative for every entrepreneur and/or CEO to undertake effective WC management in his/her organization.
Here’s a quote that explains this well:
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In this ongoing series #GreatMinds on my blog, I am shining a spotlight on the important ideas that some very successful people keep talking about in their public life.