Capital Survey Business

Question: Read the journal article, "Business Seeking Working Capital-Survey." Based on the information presented in the article, discuss the following: 1. How should a business use working capital analysis? 2. Which is more important to the short-term lender: the stock of cash or the flow of cash? 3. It is possible in today's business to operate with no current liabilities? Answer: Introduction The study will massively shed light on the importance of the working capital analysis of a business. The evaluation between the importance of the stock of cash and flow of cash has been discussed within the study as per the need. Body of the Discussion According to the Sageworks which is a financial company, various business applying for loans are looking to finance receivables and other working capital. Almost 17 % of the total banking professionals, who were surveyed, said that most business are seeking loans in order to free the capital that are tied up in receivables (Stats, S. 2015). The funding of the day to -day operations of a firm is done by the working capital. The working capital analysis should be used by any business in a well-constructed manner. This can be done by analyzing the accounts payable, inventory and accounts receivable cycles in terms of days. Poor cash management is probably the most frequent stumbling. Cash flow and stock of cash both are gigantically vital for the health of a business. The short-term lenders may continue their business even if they are making loss by keeping the cash in the business (Clark, Monk, 2011). One of the most common ways to do this is by delaying the payment to creditors etc. The liabilities of a company are vital factors in understanding the status within any sector in which it is involved. As per the journal of Commercial Lending, companies are obligatory to follow certain accounting rules and procedures (Stats, S. 2015). However, these rules allow certain considerable flexibility in how companies accounts for liabilities. Conclusion The study brings us to the conclusion that working capital analysis is possible by monitoring the accounts payable, inventory and accounts receivable cycles. Additionally, the study also concludes that stock of cash is of utmost importance to the short-term lenders. Reference List Journal Clark, G., Monk, A. (2011). The Working Capital Analysis. SSRN Journal. Website Stats, S. (2015). Businesses Seeking Working Capital--Survey. Forbes. Retrieved 4 June 2015, from https://www.forbes.com/sites/sageworks/2013/04/12/businesses-seeking-working-capital-survey/