14 Factors Affecting Working Capital Requirements

This means the time wanted to acquire uncooked materials, manufacture goods, and sell completed goods is optimum. It has strong goodwill as it makes common and well timed payments to its creditors and different short-term lenders. Also, the Net Working Capital indicates the short-term solvency of your small business. It helps your creditors to know your liquidity position earlier than supplying goods or providers on credit score to you . As mentioned above, the Net Working Capital is the distinction between your business’s short-term belongings and short-term liabilities.