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Description
All the studies on working capital generally states that for the improvement in profitability we should manage our working capital effectively and most of the studies recommended to have good amount of working capital in the organization. All the researches on this topic conclude that the companies should avoid under-investment in working capital if they want higher profit margins. With working capital there can be a danger of insolvency but it is not true forever. If the company is having a good image in the market and good relation with their creditors it can get the benefit from the working capital also. Hence, the question arises that having working capital is good for an organization or not and if a company is earning profit continuously with having working capital, can we say that it is a sign of managerial efficiency or there might be the chances of possible bankruptcy of the company? Keeping these views in mind, this research article explains the conceptual background of the working capital and how it affects profitability of the corporate.
