Horti-Business Management (2+0)

Significance of working capital

• Every running business needs working capital. Even a business which is fully equipped with all types of fixed assets required is sure to fail without i) adequate supply of raw materials for processing ii) cash to pay wages, power and other costs, iii) creating a stock of finished goods to feed the market demand continuously and iv) the ability to grant credit to customers. All these require working capital. Thus working capital is the lifeblood of a business without which a business will be unable to function. No business will be able to carry on day to day activities without adequate working capital.