Lean, mean borrowing machines – Encourage borrowers to cut the fat from working capital

Description

Abstract: Working capital — current assets minus current liabilities — is traditionally a measure of liquidity. High liquidity generally equates with low risk, but excessive amounts of cash tied up in working capital detract from other spending options, such as expanding to new markets, buying equipment and paying down debt. This article discusses five best practices for reducing working capital. A sidebar cites a study showing that top performers have significantly lower working capital on hand than do mediocre companies.