What is the Need and Importance of Working Capital?

1. To ensure regular supply of raw materials – smooth running of production process.
2. Timely payment of wages and salaries – improving morale and efficiency of employees.
3. For efficient use of fixed assets.
4. To make payments to creditors on time – maintain reputation – improve goodwill
5. Helps to avoid the possibility of under capitalization.
6. To pay dividend and interest on time – improve confidence of investors
7. Easy loans from financial institutions
8. Ability to face crisis
9. Exploitation of favourable market conditions.
10. Helps to avail cash discount from suppliers.

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Working Capital