Finance - Cash flow and working capital - Working capital

4 important questions on Finance - Cash flow and working capital - Working capital

What is the definition of working capital?

The cash that a company needs to keep its business running. It represents the ability of a company to meet its short-term obligations

What does a large amount of working capital means?

The assets of a company are more than sufficient to cover the liabilities that will come due in the short-term

What is the difference between cash flow and working capital?

  • Working capital provides a snapshot of the present situation
  • Cash flow is a measure of a company's ability to generate cash over a specific period of time
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What is a burn rate?

A negative cash flow, it is a measure of how fast a company will consume its equity or shareholder capital

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