Explore BrainMass

Explore BrainMass

    Negative Net Working Capital

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Is it possible for an organization to operate with negative net working capital? Why or why not?

    Would a company with high profit margins be more likely to adopt an aggressive or a conservative working capital policy? Why?

    Is it possible for an organization to be profitable and run out of cash? How?

    © BrainMass Inc. brainmass.com March 4, 2021, 7:15 pm ad1c9bdddf
    https://brainmass.com/business/working-capital-management/negative-net-working-capital-90573

    Solution Preview

    Is it possible for an organization to operate with negative net working capital? Why or why not?
    Yes. It is possible. The firms which have their current liabilities more than their current assets have negative net working capital. It is possible in case of companies managed with integrated supply chain and where the power of the companies is so high that they can get better credit terms from their suppliers but sell their products to the customers on cash basis. Dell is one example which uses direct model to ...

    Solution Summary

    A discussion on operating with negative net working capital.

    $2.49

    ADVERTISEMENT