How to Increase Days of Working Capital on Capism
How to increase days of working capital on capism?
Remember, ideal is between 30-90 days. Ensure that you do not have too much.
Working capital is increased through long-term borrowing, the issuance of shares, the sale of capacity, and other means of raising current assets or decreasing current obligations. By decreasing sales, you also boost working capital days (if positive).
Retiring bonds and stock, purchasing capacity and automation, issuing dividends, and reducing current assets and current liabilities in various ways all serve to reduce working capital. Increasing revenues also reduces days of working capital (if positive).
Current borrowing is neutral since you acquire a current asset (cash) and create a current liability (short-term debt). However, it is a useful tool for managing your funds while interacting with the aforementioned variables.
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