In these turbulent times focus on cash for small businesses continues to be a key area of concern. Many a board room is currently understandably obsessed with cash collection.
The investor needs to try and understand what is going on within these companies, since if a company remains profitable but fails to maintain its working capital then the company will become insolvent.
Insolvency will normally result in the investors losing all of their investment. Using such methods as Working Capital Sales Ratio will give the investor an opportunity to try and understand the challenges being faced within the company.
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