How is negative working capital different from positive working capital?

Negative working capital is different from positive working capital because it means you have more current liabilities than current assets.

Is negative working capital a sign of financial distress?

Typically, negative working capital is a sign of financial distress. However, businesses in some industries will experience it more frequently without issue.

How do investors view negative working capital?

Investors often see negative working capital as a negative, indicating a company with major cash flow issues.

What is a negative working capital cycle?

A negative working capital cycle means your company collects money in less time than is required to pay the bills. 

About the Author

TJ Porter

TJ Porter

Personal Finance Writer

I have in-depth experience in reviewing financial products such as savings accounts, credit cards, and brokerages, writing how-tos, and answering financial questions both simple and complicated.

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