| Commentary

1 Need for working capital

| Commentary

Commentary

A: INTRODUCTION TO COMPANIES vol 10(2)

1 Need for working capital

All companies need working capital, and when a company is first formed there are likely to be initial costs, such as the purchase of plant and machinery, which have to be met at a time when no income has yet been received. Although it is sometimes possible to defer those costs by leasing equipment rather than purchasing it, other costs such as initial marketing expenses are not so easily delayed. Naturally, some of the initial working capital will come from the money invested by shareholders, but this is often insufficient.

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