What does workinf capital means ? What effect does it have on firm ?

What do you think it is first?

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Excess of working capital means excess of assets over liabilities of a firm...

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Originally Posted by rosalia

excess of working capital means excess of assets over liabilities of a firm....

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Yes... and it means what to the firm if you think about being flush with money? It's the same if it was you and you had extra money.

Yes you are right but business have their secret reserves which is unknown to their creditors and shareholders resulting in excess working capital.. the money comes from their profit earning capacity..