Aggressive Working Capital Management Boosts Profits, But Risks Liquidity Crises
The article explores how managing a company's short-term assets and liabilities affects its profitability. By analyzing working capital, firms can maximize value and minimize risk. A balanced approach is crucial to ensure smooth operations and financial stability. Aggressively managing working capital can impact profitability, with low levels of current assets potentially harming the firm. The main goal is to find the optimal balance between different working capital components to enhance overall performance.