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Why is the cash position negative when the working capital is less than the working capital requirement?

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تم إضافة السؤال من قبل Nadjib RABAHI , Freelancer , My own account
تاريخ النشر: 2017/02/28
Sakhi Muhammad Imran
من قبل Sakhi Muhammad Imran , Finance Manager , United Catering Co. WLL

This is liquidity problem and its due to mismanagement of working capital.....

current asset increase while current liability decreased but paid with cash

Ashraf E. Mahmoud (PhD)
من قبل Ashraf E. Mahmoud (PhD) , University Lecturer, Freelancer Consultant and Trainer for Int'l Business & Banking TF. , FreeLancer

Thanks for invitation,

In my opinion, when the working capital of any organization is less than the working capital requirements, this means that this organization has a "liquidity problem", which is clearly reflected on the negative cash balance.

Soliman Abd  ALmalak Gendy
من قبل Soliman Abd ALmalak Gendy , مدير ادارة مراقبة حسابات , الجهاز المركزى للمحاسبات

That's due to: the decrease of current liabilities meet the increasment of current assets

Abdullah Aziz Eldain Morsi  Elgendy -        CMA  Candidate
من قبل Abdullah Aziz Eldain Morsi Elgendy - CMA Candidate , Regional Receivable Accountant , Amiantit Group of Companies

 working capital  is

current assets minus the current liabilities

 that means  the  decrease  of the current liabilities  meets  increment of the current assets     

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