6 Reasons Working Capital is the Blood and Nerve Center of a Business

6 Reasons Working Capital is the Blood and Nerve Center of a Business

Why working Capital is most Important Aspect of Every Business?
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Working capital is simply the amount of money that a business has to operate with. It is the current assets minus the current liabilities. Current assets include cash on hand, inventory and accounts receivable. Liabilities include accounts and notes payable, expenses, and current loan/debt payments.

Working capital represents the liquidity of a company, a measure of its value, efficiency or stability (depending on how you want to look at it).

Working capital is important primarily because it is the money that keeps a business running. With little working capital, a company won’t . . . work. Here are some of the ways that working capital is the lifeblood of a business.

1. Strengthening Solvency

Solvency is the measure of how much greater your assets are than your liabilities; it tells you how easily you can pay off your debts. Having sufficient working capital is the first and best way to pay off short-term liabilities. When you are able to easily pay salaries, equipment rentals, and other immediate costs, then your company can run more smoothly.

2. Moving Forward

One of the most effective ways to propel your business forward is with the use of working capital. When you have the right amount of disposable working capital, you can easily pay off any debts or costs and focus on investing for future expansion. Negative working capital (i.e. a situation where your liabilities are greater than your assets) means that you do not have the capacity to expand.

3. Developing Relationships

When a business is able to make all its necessary payments in a timely manner, it breeds trust and goodwill among its employees, with its vendors and other external agents. With sufficient working capital, a business never has to worry about running afoul of someone to whom it owes money.

4. Improving Health

Working capital can tell you how healthy your company currently is. The current liquidity of a business, also the net working capital, is one of the most important determinants of its health. Liquidity tells investors how easily a company’s assets can be converted into cash. As the amount of money available for day-to-day operations, working capital is intimately tied to liquidity and how easily work can get done in the business.

5. Getting Loans

Every business owner hopes to be able to expand his or her business. In cases where large expansions are planned, a loan may have to be taken out. When a business has good solvency and credit, it is more likely to be approved for a loan. Good working capital, therefore, helps you not only expand using your own resources but also helps you find external funding for expansion.

6. Handling Crises

Any business is likely to face a crisis at some time in its life. How these crises are handled depend largely on the working capital available to the business. Firms with good working capital are able to absorb blows to their revenue stream and keep moving forward.

Make Working Capital Work for You

Working capital is either expressed as a money value (assets minus liabilities) or as a ratio (assets over liabilities). Any business should aim for at least a working capital ratio of 1.2. Whether your company is just getting off the ground or has been operating for decades, managing working capital is key to its profitability.

Managing working capital is an important skill to have. As we have seen, a company’s working capital is one of the most important pieces of information to know regarding its current health and future profitability. Managers who understand working capital and how to use it stand poised to leverage its many benefits to increasing profits.

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To The Nursing Major

Is it all worth it?
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"You're going to feel like quitting. You're going to struggle. You'll have days where you'll wonder, 'what's it all for?' You'll have days when people attempt to break you down, or challenge your intelligence, skills and right to be where you are. You'll have moments when you question your own abilities, and perhaps your sanity - but you'll rise. You'll rise, because your strength as a nurse is not determined by one grade, one shift or one job - it's an ongoing journey of learning, honor, humility and a chance to make even the smallest difference in the lives of your patients."

Don't ever give up on achieving your dreams to be a nurse. Keep pushing forward, no matter how hard it is. Nursing is not an easy major. You will have very little, if any, time to do anything other than study. But just think about how great it will feel to connect with a patient, pray with them, and even save his or her life. This will make all of the late night studying, weekly breakdowns, countless cups of coffee, and tests so hard all you want to do is cry, worth it. To see a patient's face light up when you walk in his or her room will make your heart melt and you'll know you chose the right major.

The kind of nurse you will be isn't based on a test grade, it's based on your heart for the people you are caring for. You may have failed a class, but don't let that ruin you. Try again and keep pushing toward your goal. Don't allow others around you to drag you down and tell you you aren't good enough to be a nurse. Show them how strong you are and that you will never give up. There will be days when all you want to do is quit, I know I question my major more than once a week; however, there is a patient out there that needs you and your caring heart. You can do this, have faith in yourself that you can move mountains.

I will say that you definitely must have a heart for nursing. Personally, I want to be a Pediatric Oncologist and work at St. Jude Children's Research Hospital. Just the thought of those precious children going through the hardest part of their lives, keeps me going so that I can be there for them. I want to be a light to my patients and their families during a dark time. When I feel like giving up, I just think about how many lives I have the chance to touch and I keep on going. So when you feel like giving up, just think about your future patients and how you can make a difference, even if its only for one person. I love the quote from Katie Davis that states, "I will not change the world, Jesus will do that. But I can change the world for one person. So I will keep loving, one person at a time." Even though this quote is about foreign missions, I believe it fits the mold for nursing as well. Nurses have the opportunity to change the world for people everyday. Just remember that, smile, don't give up, and keep pushing toward your goal.

Cover Image Credit: chla.org

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You Know Economic Capital and Social Capital, How About Energy Capital?

Gaining capital = gaining mobility.

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The most over-used phrase in America is "All you have to do is work hard to get ahead." Another one is the classic, "You can't have a million dollar dream with a minimum wage work ethic." Both of these exhausted ideas are busted by looking at the importance of economic and social capital.

Obviously, our capitalist system is not an equal one. One of the ways in which we're distinctly separated is by our economic and social classes. When we advance by making gains, we accumulate capital, which mobilizes us and enables us to more easily climb and gain more capital. The growth, then, is exponential. If we are born into a great deal of capital, it is immediately easier to gain more.

Economic capital is clear enough; we may call this wealth. It's about our money, our assets.

Social capital, on the other hand, is our position in society. It includes our network and the power of those with whom we hold relationships, our education, and the communities in which we are raised. For example, people raised by parents with college degrees have social capital because they are in positions to understand and help out with the processes of applications and financial aid and the dynamics of post-secondary education.

But there's another kind of capital that plays a role in our mobility. This is energy capital.

This is where my issue with the "minimum wage work ethic" concept arises. I've worked near-minimum-wage jobs. I've worked in fast food. And in every case, I am confident in stating that my coworkers and I worked extremely hard. When I worked at McDonald's, I would go home every day and collapse on the couch because it had taken everything out of me. Physically, my feet were killing me. Emotionally, I was exhausted and tense from being mistreated by customers who dehumanized me. And since I also wasn't making enough money to have extra economic capital, I had to dispense even more emotional energy once I got home to stress over finances.

One of the biggest critiques of fast food workers like myself is that we just need to work toward another job. Yes, that's very true. But the last thing I wanted to do when I got home was get on the job hunt; all I really wanted was to go to sleep. And since I had no connections (less social capital), this job search would take a lot more effort than someone who could contact a family friend.

Meanwhile, there exist people at the top who can make a great deal of money without working all that hard. Some can even get away with no work at all. Some can also then pay for cooks and nannies and housekeepers and wealth managers and tax professionals and tutors for their kids and plumbers and electricians and repairpeople and restaurants and so on and so forth. And they don't have to dispense nearly as much energy.

Now, I don't want to insist that energy capital is always linked to higher economic or social capital. Many people with a lot of economic and social capital work extremely hard. Similarly, there do exist people with no economic and social capital who are in that position because they expend no energy at all.

However, it is necessary to consider energy as an additional criterion in building the capacity for safety, power, and mobility in society.

This is also tied up with privilege. People in positions of privilege (i.e. men, white people, Christians, heterosexual and cisgender people, temporarily able-bodied people, etc.) need not expend the energy to consider stereotypes and prejudices on a day-to-day basis; they can focus all of their energy on their mobility, which already comes easier.

Extra energy is extra capital. Know where you're privileged.

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