Title: Working Capital Management Importance | Top 4 Reasons
Headings: Working Capital Management Importance
Working Capital Management Importance
Why is Working Capital Management Important?
Top Reasons for Working Capital Management
#1 – Improvement in the Credit Profile and Solvency of the Company
Example
#2 – Use of Fixed Assets Efficiently
Example
#3 – Ability to Face Crises
Example
#4 – Expansion
Example
Conclusion
Recommended Articles

Content: In case there is sufficient working capital, fixed assets can be used properly, and production can be increased, thereby increasing the revenue. This is the perfect example of how the management of working capital can lead to effective use of the fixed assets of the company. #3 – Ability to Face Crises
In case there is proper management of the working capital, then the business concern will be able to face crises properly during the emergency period like depression. Generally, the companies keep don’t have an adequate amount of working capital in case of an emergency, which will affect the business negatively in can any emergency occurs. Example
There are two companies ABC Ltd and XYZ Ltd, in a town competing with each other. Suddenly the situation of depression occurs in the economy. ABC Ltd has an effective mechanism for managing working capital and keeps funds for emergencies, whereas the XYZ ltd doesn’t have proper management of the working capital and doesn’t keep funds for an emergency. Suddenly situation of depression arises in the economy. Now, in that case, ABC Ltd will be able to continue its operation as it has proper management of the working capital whereas XYZ ltd will have to stop the production as it doesn’t have the working capital. Also, ABC ltd with adequate working capital can reap more amounts of benefits during this time due to a lack of working capital management by its competitor.