Difference between working capital and cash flows and why this is important for the company.

Question

Accepted Answer

Working capital is the difference between current assets and current liabilities, while cash flows represent the movement of cash in and out of the company.

Working capital is a measure of a company's operational efficiency and short-term financial health.
Cash flows show how much actual cash a company is generating or using in its operations.
Working capital management is crucial for ensuring a company can meet its short-term obligations and invest in growth opportunities.
Cash flow analysis helps in understanding the liquidity and solvency of a company.
For example, a company with high working capital but negative cash flows may struggle to pay its bills on time.
Conversely, a company with low working capital but positive cash flows may be efficiently managing its resources.

Difference between working capital and cash flows and why this is important for the company.

Top Gulf Marketing Group Finance Planning and Analysis Manager interview questions & answers

Popular interview questions of Finance Planning and Analysis Manager

Top HR questions asked in Gulf Marketing Group Finance Planning and Analysis Manager