In What Ways Are Working Capital and Cash Flow Related to Resiliency?
In What Ways Are Working Capital and Cash Flow Related to Resiliency?
The term “resiliency” refers to how fast your company can respond to an issue and go back to its original condition. If a decline in sales takes place, your business could be more resilient provided that your networking capital is more than your debts, which you can anticipate paying in the next twelve months.
If you are to apply this notion to the business cash flow summary, then you would not be able to determine how your company would stay afloat. You would only have information pertaining to how much your business spent and how much it made. That said, this kind of thinking will result in issues and has a higher risk of failure.
To help protect against doubt in business success, you have to understand the difference between a cash flow summary and a working capital summary. The former summary reflects how much money came into and went out of your business, but the latter shows how stable it will be in the 12 months to come, which is a piece of absolutely essential information to need to have to meet your business goals.
