Working Capital and Time

Abstract

Working capital represents the cash that companies need on a daily basis to operate, or more appropriately, the cash that the company requires to wait the time necessary to convert its raw materials into finished goods, for these products to be sold and for the company to recover its money. The most important components of working capital are: cash, inventories, accounts receivable and accounts payable. Investors observe the performance of these items as indicators to measure the financial strength of the business, as well as administrative efficiency.