What are the uses of working capital?

2 min read

Working capital indicates a company's short-term financial health required to run a business's daily operations. Following are the uses of working capital:

  1. Maintaining an optimum level of inventory
  2. Paying creditors on time
  3. Having a cash reserve
  4. Managing short-term debts
  5. Meeting unforeseen or unpredictable expenses
  6. Meeting miscellaneous day-to-day business expenses

In some cases, when a business might experience a cash crunch due to an impending financial contingency, it may require a working capital loan.

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