Title: What Does High Working Capital Say About A Company?
Headings: What Does High Working Capital Say About a Company?
What Does High Working Capital Say About a Company?
Understanding High Working Capital
Analyzing Working Capital

Content: All debts and expenses a company is obligated to pay within the coming 12 months
Short-term debts
Interest and tax payments
Accounts payable
The cost of supplies and raw materials, rent, utilities, and other operational expenses
Understanding High Working Capital
If a company has very high net working capital, it generally has the financial resources to meet all of its short-term financial obligations. Broadly speaking, the higher a company's working capital is, the more efficiently it functions. High working capital signals that a company is shrewdly managed and also suggests that it harbors the potential for strong growth. Not all major companies exhibit high working capital. In fact, some large corporations have negative working capital, where their short-term debts outweigh their liquid assets. Typically, the only entities capable of remaining solvent amid these circumstances are behemoth corporations with significant brand recognition and robust selling power. Such companies are able to quickly generate additional funds, either by shuffling money from other operational silos, or by acquiring long-term debt. These companies can easily meet short-term expenses even if their assets are tied up in long-term investments, properties, or equipment rentals. Though most businesses strive to maintain consistently positive working capital, in some cases, very high working capital may indicate that a company isn't investing its excess cash optimally, or that it's neglecting growth opportunities in favor of maximizing liquidity. In other words, a company that does not intelligently deploy its capital is potentially doing a disservice to itself and its shareholders.