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Working capital is considered as excess of Current assets over current liabilities but companies like HUL, Godrej, Bharti airtel, Hero Motorcorp, faces negative working capital in their operating life. Thus their current liabilities exceed their current assets in some years.What is your belief in this regard, can working capital ever be negative or Zero for any company? If yes than what shall be the repercussions if a company has (a) dearth of Working Capital and (b) overload of Working Capital? |
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Answer» Answer: YES, possible Explanation: Yes it is possible for a company to have zero or negative working capital. Working capital TAKES account of the assets of the company as well as its liabilities. When the liabilities are more than the assets in hand, then the company WOULD have zero or negative working capital. If a company has negative working capital, it will hamper its LONG term investments and financial growth. Higher the working capital, more will be its potential to grow in the business |
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