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Working Capital

Today's Must Read
Mike Kraus
Check out these big ideas that are virtually free
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By Sara Wilson |  Filed In: Buying a Franchise and Franchises
When buying a franchise, want to convince a franchisor you’re a perfect fit as a franchisee? Follow these 5 steps.
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Mike Kraus
By  | Filed In: Retailers and Retail
Discounting, when done correctly can drive traffic and sales
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Historically many lenders haven't enforced this rule. Until now.
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Mike Kraus
Testing new lines and categories is the catalyst for incremental sales.
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Mike Kraus
Testing new lines and categories is the catalyst for incremental sales.
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Budgeting is the most effective way to consistently meet profit targets and avoid costly surprises.
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Ramon Ray
By  | Filed In: Web Development and Web Sites
This week's list features some great learning and networking opportunities in the next few months. This list of events, conferences and webinars for growing small businesses and entrepreneurs is brought to you every...
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By Don Sadler |  Filed In: Commercial Mortgages and Mortgage Loans
Businesses can gain cash when they sell their property and then immediately lease it back from the new owner.
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By Ken Walker |  Filed In: Franchises
Small business owners must know what to expect if they are to grow their companies.
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By  | Filed In: Recession and Economic Conditions
The power is in retailers' hands to get great deals on retail space. Just ask.
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Congress’s penny-wise, pound-foolish budget decisions threaten to punish countless small businesses that depend on stimulus provisions like bonus depreciation.
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It is important to be proactive in resolving the issues.
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The National Export Initiative aims to double exports over the next five years.
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An interview with Jeff Bussgang, General Partner at Flybridge Capital Partners, an early-stage VC firm, and former entrepreneur
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Ramon Ray
Summer? Slow? Not for small business events - Don’t miss these great events, conferences and webinars for growing companies this summer and fall.
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Sam Thacker
The programs can provide up to $35,000 to qualified borrowers.
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Mike Kraus
It's a balancing act of sales vs. inventory position given the sluggish economy.
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To get through to frazzled buyers you need a value proposition that speaks right to their needs. Jill Konrath's latest book tells you how to do it.
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By Carol Tice |  Filed In: Wages & Salaries and Compensation & Benefits
Offering equity can be a good move for several reasons.
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New On AllBusiness

Business Glossary

Definitions for: negative working capital
negative working capital

situation in which the current liabilities of a firm exceed its current assets. For example, if the total of cash, marketable securities, accounts receivable and notes receivable, inventory, and other current assets is less than the total of accounts payable, short-term notes payable, long-term debt due in one year, and other current liabilities, the firm has a negative working capital. Unless the condition is corrected, the firm will not be able to pay debts when due, threatening its ability to keep operating and possibly resulting in bankruptcy.

To remedy a negative working capital position, a firm has these alternatives: (1) it can convert a long-term asset into a current asset-for example, by selling a piece of equipment or a building, by liquidating a long-term investment, or by renegotiating a long-term loan receivable; (2) it can convert short-term liabilities into long-term liabilities-for example, by negotiating the substitution of a current account payable with a long-term note payable; (3) it can borrow long term; (4) it can obtain additional equity through a stock issue or other sources of paid-in capital; (5) it can retain or "plow back" profits.

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