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Working Capital: What Is It and Do You Have Enough?

Michael Boehlje and, Michael Langemeier (August, 2015)

Summary

Maintain your working capital! This phrase is commonly heard in discussions with lenders, advisers, and management specialists in today’s environment of relatively low crop net returns or margins. This brief article answers the following questions: what is working capital and how is calculated, why is working capital needed, how much working capital do you need, what are common errors in measuring working capital, and how can you manage working capital.