Working capital is the life blood for running an organization. It is very essential to maintain smooth running of a business. The main significance or importances of working capital are as follows:
1.
Supports
as initial partial capital: The working capital can helps
to
adequate liquidity to developing a business.
2. Strengthen the Solvency: It helps to operate the smooth flow of
production and business
without any financial problem for
making the payment of short- term
liabilities.
3. Enhance the project growth: Sufficient working capital enables
to
make prompt payments
and helps in creating goodwill.
4. Easy obtaining finance: A firm
having adequate working capital, high
solvency and good credit rating can arrange loans from
banks in easy and
favorable terms.
5. Regular supply of raw material: Quick payment of credit purchase of raw materials ensures the regular supply of raw materials
from suppliers.
6. Smooth business
operation: It maintains a good shape in entire developments
for a developing project.
7.
Ability to face crisis: In crisis to emergency needs, it enables
to
meet working capital requirement for the project.