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Optimal Level of Working Capital

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Optimal level of working capital is that level where company is capable to pay day to day expenses and company has enough cash to buy the stocks in case if it does not receive money from debtors on the time. This level is achieved by thinking and using the techniques of working capital management. We all know that both low level or over level of working capital is harmful for development of business. If company has not enough cash to repay its liability, it will create the risk of solvency and liquidity  and company may go for liquidation. In case, company has over working capital, it will be misuse of money because that money is not gaining any earning and its opportunity cost will suffer by shareholders and ultimately it will decrease the value of share in share market. So, as finance manager, you should try to create equilibrium or optimal or optimum level of working capital.

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Accounting Education: Optimal Level of Working Capital
Optimal Level of Working Capital
Accounting Education
https://www.svtuition.org/2010/05/optimal-level-of-working-capital.html
https://www.svtuition.org/
https://www.svtuition.org/
https://www.svtuition.org/2010/05/optimal-level-of-working-capital.html
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