What are some examples of working capital?
Working capital is a term used to describe cash or other liquid assets held by a company to meet its short-term obligations. This money is typically used to pay for raw materials, supplies, and services needed to run the day-to-day operations of a business.
The working capital loan helps businesses stay afloat during slow periods, such as seasonal fluctuations. For example, if a business has a large inventory of goods in storage, it may need to raise additional funds to cover those costs until demand picks up.
If a business runs out of cash, it would likely go bankrupt. In order to ensure that they don't face financial trouble, companies often look into ways to increase their cash reserves.
People also read