Question

In the economic environment of 2010-2014, the U.S. experienced a slow-growing economy with record low interest rates. In what ways does this type of economic environment diminish the importance of working capital management to the firm? In what ways is working capital management still important in this environment?

Answer 1

In a low growth economy , when the interest rate are very low, Working capital are not that relevant as business doesn't need to pay much interest and loan can also be obtained very easily.

But even in such scenarios, a good business has to keep an adequate amount of working capital as it provides with ample liquidity and when the economy will start to grow, such firm will quickly capitalise, so in an anticipation of such future a good business need to have adequate amount of working capital .