Working Capital - Current Assets and Current Liabilities

Question

I do not know the meaning of Working Capital Requirements. I think this should be same to Working Capital (Current Assets – Current Liabilities). There am I right?

Answer 1

The Working Capital Requirements shows the difference among the current assets essential for the operations of the company (minimum cash holdings, inventories and clients) and the current liabilities without financial debt (provisions and providers etc.). They are different from Working Capital since the latter does consider financial debt. While a company grows, its financial necessities raise more or less proportionally to the Working Capital Requirements.