Explain in detail:
Working capital refers to the balance of current assets minus current liabilities (short-term liabilities, etc.). ). If current assets-current liabilities >; 0, the corresponding "current net assets" are funded by long-term liabilities and a certain share of investors' equity; If current assets-current liabilities =0, the funds occupied by current assets are all current liabilities financing.
If current assets-current liabilities
Negative working capital is a sign that current liability financing is occupied by long-term assets such as current assets and fixed assets, indicating that the cash flow of enterprises is exhausted and the solvency is poor. As a result, the company or enterprise may have a broken capital chain and poor management. It may encounter bottlenecks in the history of enterprise development, or it may go bankrupt, which is the most dangerous signal in the process of enterprise management.
What is the reason for the negative operating cash flow?
The market competitiveness of products or services is insufficient. When the market demand for products or services is reduced or the competitiveness is weakened, the sales revenue of enterprises will be affected, resulting in a decrease in operating cash inflows. At the same time, in order to maintain or expand market share, enterprises may sell products or services by means of credit sale, discount and promotion.
This led to an increase in accounts receivable and further reduced the inflow of operating cash. Therefore, improving the market competitiveness of products or services is the fundamental way to improve negative operating cash flow. Specific measures include: strengthening the research and innovation of products or services, improving their quality, function, efficiency and added value, and meeting customers' needs and expectations.
Strengthen market research and analysis, understand customers' preferences, needs, feedback and opinions, and timely adjust the design, pricing, promotion and service strategies of products or services. Strengthen communication and cooperation with customers, establish a good reputation and relationship, improve customer loyalty and satisfaction, and reduce the risk of credit sales and bad debt losses.
Strengthen the comparison and research with competitors, understand their own advantages and disadvantages, find their own differences and advantages, and improve their competitiveness and anti-risk ability.