What Is The Significance Of Payables In Calculating Working Capital Requirements?
Working capital is the difference between the current assets and the current liabilities. In determining the working capital requirements it is aimed that how much current assets are available to the company to pay off its current liabilities like account payable. Therefore, if a company wants to increase its working capital requirements then it will need to decrease its payables to meet the other objectives. On the other hand, if the company does not want to keep working capital idle then it can enhance its payables. Therefore, payables are very important in determining the working capital requirements.
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