The state where a company is basically operating with no capital because the company's liabilities exceed the available assets. A company cannot operate with negative working capital for an extended period of time because the company will be unable to meet payment requirements on certain liabilities if the additional funds are not acquired. A company can quickly identify this state by looking at the accounts receivable information and comparing that to accounts payable information.
Related information about negative working capital:
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situation in which the current liabilities of a firm exceed its current assets. For example, if the total of cash, marketable securities, accounts receivable.
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Definition of negative working capital: The state where a company is basically operating with no capital because the company's liabilities exceed the available ...
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