Negative working capital is always bad

Definition: Some highly efficient businesses (e.g., Amazon, Costco) operate with negative working capital by collecting from customers faster than they pay sup…

Reality

Some highly efficient businesses (e.g., Amazon, Costco) operate with negative working capital by collecting from customers faster than they pay suppliers, effectively using supplier financing to fund operations.

Why It MattersUnderstanding why "negative working capital is always bad" is a misconception helps avoid analytical errors and improper financial decision-making.
CategoryFinancial Analysis

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