Negative Net Working Capital
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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?
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A discussion on operating with negative net working capital.
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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 ...
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