Talk:Working capital
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Positive working capital means that the company is able to pay off its short-term liabilities. Negative working capital means that a company currently is unable to meet its short-term liabilities with its current assets (cash, accounts receivable, inventory).
The article currently says "Any change in the working capital will have an effect on a business's cash flows. A positive change in working capital indicates that the business has paid out cash, for example in purchasing or converting inventory, paying creditors etc. Hence, an increase in working capital will have a negative effect on the business's cash holding. However, a negative change in working capital indicates lower funds to pay off short term liabilities (current liabilities), which may have bad repercussions to the future of the company."
I think the positive/negative are switched around here. A "positive change in working capital" would mean working capital has increased, and thus the business has received cash, or converted inventory to cash. An increase in working capital would not have a negative impact on the business's cash holdings. An increase in working capital would mean that current assets have increased with regard to current liabilities. This is a good thing. I'm going to edit this.DanIzzo 21:53, 3 April 2007 (UTC)
