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Working Capital

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How would you define working capital? What could happen if an organization neglected to manage its working capital? What working capital techniques would you recommend for a health care organization? Why?

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Solution Summary

The solution defines working capital, what happens if an organization neglected to manage its working capital, the working capital techniques recommended for a health care organization and reasons. References included.

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How would you define working capital?

Working capital is the measure of both a company's efficiency and its short-term financial health. The ratio of working capital is calculated as: Working Capital = Current Assets - Current Liabilities. Working capital measures how much liquid assets are available to a company to build its business. The number can either be positive or negative and depends on the debt the company is carrying. Generally, companies that have much working capital will be more successful than those who have less since they can easily expand and improve their operations. Companies having negative working capital may lack the funds that are necessary for growth. Working capital is also called net current assets or current capital.

What could happen if an organization neglected to manage its working ...

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