Title: What are working capital costs?
Headings: What Are Working Capital Costs?
What Are Working Capital Costs?
Key Takeaways
Which Items Are Included in Working Capital Costs?
Measuring Working Capital for Liquidity Purposes
The Importance of Working Capital Management
Working Capital Example: Coca-Cola

Content: Companies whose current assets exceed their current liabilities are said to have positive WC, while those whose current liabilities exceed their current assets are said to have negative WC. The Importance of Working Capital Management
Working capital is a daily necessity for businesses, as they require a regular amount of cash to make routine payments, cover unexpected costs, and purchase basic materials used in the production of goods. When a company does not have enough working capital to cover its obligations, financial insolvency can result and lead to legal troubles, liquidation of assets and potential bankruptcy. Thus, it is vital to all businesses to have adequate management of working capital. Working capital management is essentially an accounting strategy with a focus on the maintenance of a sufficient balance between a company’s current assets and liabilities. An effective working capital management system helps businesses not only cover their financial obligations but also boost their earnings. Managing working capital means managing inventories, cash, accounts payable, and accounts receivable. An efficient working capital management system often uses key performance ratios, such as the working capital ratio, the inventory turnover ratio and the collection ratio, to help identify areas that require focus in order to maintain liquidity and profitability. Working Capital Example: Coca-Cola
For the fiscal year ending December 31, 2017, The Coca-Cola Company (KO) had current assets valued at $36.54 billion.