From our friends at Sollertia:
‘Working capital’ is one of those phrases frequently used in business, but often misunderstood. With this in mind, we at Sollertia thought it was about time somebody put a really good infographic together on the subject.
What is working capital?
Put in its simplest terms, working capital is the money to which a company has immediate access. When valuing itself, a firm may include the land and property it owns, along with fixed assets like machinery. These have value of course, but the cash is locked up in them, so getting access to it would take time and involve major changes.
Calculating working capital means weighing up your current assets against your existing liabilities. It might sound complex, but the infographic gives the lowdown on how you should go about this, and what you should and shouldn’t include. (more…)