Working capital= Current assets - Current liabilities
Of course, positive working capital will be better. If a company have negative working capital, they will have problem paying creditors. High working capital also act as a cushion in case something goes wrong, example Covid lockdowns. Working capital is not the only way of analysing liquidity.
Working capital= Current assets - Current liabilities
Of course, positive working capital will be better. If a company have negative working capital, they will have problem paying creditors. High working capital also act as a cushion in case something goes wrong, example Covid lockdowns. Working capital is not the only way of analysing liquidity.