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: Article Link to by Hyperlinked
For eg: Source: Working Capital Management Importance (wallstreetmojo.com)
Improvement in the Credit Profile and Solvency of the Company
Use of Fixed Assets Efficiently
Ability to Face Crises
Expansion
Let us discuss these in detail one by one. #1 – Improvement in the Credit Profile and Solvency of the Company
If the company pays off the debts on time while generating revenues, then it ensures that the operating cycle of the company is properly funded, which will likely boost the credit score of the company. Whereas if the company is unable to repay its debts on time and still it is running the business with the low operating costs, then the creditors will try to get back their funds, and this would lead to a decrease in the credit score. The pre-requisite to the long-term solvency is the ability of the company to meet its short-term obligations. The adequate management of the working capital will help the business to pay all of its short-term obligations on a timely basis like the salary payment, payment against the purchase of the raw materials, and other such operating expenses of the company. Example
There is a company ABC Ltd. which pays all its loans, rent, and vendor bills on time; then this would increase the credit score of the company. This shows that how responsible management of the working capital can reward the company in the long-run.