how can a company improve its working capital 
a company can improve its working capital by increasing current assets and reducing short term debts to boost current assets it can save cash build inventory reserves prepay expenses for discounts and carefully extend credit to minimize bad debts to reduce short term debts a company can avoid unnecessary debt secure favorable credit terms and manage spending efficiently the bottom lineworking capital is critical to gauge a company s short term health liquidity and operational efficiency you calculate working capital by subtracting current liabilities from current assets providing insight into a company s ability to meet its short term obligations and fund ongoing operations positive working capital generally means a company has enough resources to pay its short term debts and invest in growth and expansion conversely negative working capital indicates potential cash flow problems which might require creative financial solutions to meet obligations working capital is a useful measure to track still it s important to look at the types of assets and liabilities and the company s industry and business stage to get a more complete picture of its finances 