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Why Working Capital is Necessary in India: Read Here

Each business, irrespective of the genre of its trade, is in dire requirement of funding to meet its day to day expenses.

With India’s economy getting steadily dependent on start-ups and businesses in their seed stage, the need for working capital assistance is now more than ever before.

It is substantiated by RBI’s new guidelines on working capital funding and is well accompanied by changing demographics across the business sector.

Thus, to continue thriving in the business genre, entrepreneurs are looking forward to having a comprehensive idea about how to calculate working capital.

Catering to this requirement, one also needs to acknowledge the various components needed to compute the working capital needs of a company - current assets and current liabilities.

Working capital is obtained by subtracting current liabilities from current assets; it may result in positive or negative WC.

A positive WC reflects that a company has enough liquidity to meet its short-term financial goals and internally finance their growth. On the flip side, a negative business capital showcases that a company is unable to use its current asset to its best potential.

Taking into account the significant role that working capital plays as a financial pivot for a company, multiple NBFCs now offer their business loans. Such financial assistances bring in multiple lucrative features and ensure that the financial requirements of a company are well-catered to.

Following up with the availability of such financial aid, running out of working capital would never be a concern. All that individuals need to do is calculate the available and required WC, and invest in the business accordingly to overcome its shortcomings.

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