Working capital is the life blood for running an agro/industrial project. It is very essential to maintain smooth running of a business. The main advantages or importance of working capital are as follows:
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. Regular payment
of operating expenses-operating expenses of
an organization such as wages of
labour, materials purchase and other
expense needs
sufficient wirking capital.
5. Easy obtaining loan: A firm having adequate working capital, high solvency
and good credit rating can arrange loans from banks in easy and favorable terms.
6. Regular supply of
raw
material: Quick payment of credit purchase of
raw
materials
ensures
the regular
supply of
raw materials from
suppliers.
7. Smooth
business operation: It maintains a good shape in entire developments
for a developing project.
8. Ability to face crisis: In crisis
to emergency needs, it enables to meet working capital requirement for the project.
9. Possibility of getting cash discount—sufficient working capital increase the purchasing ability of an organization and cash payment for
purchased goods
give discount from
seller.