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S Illinois | I believe the misconception from below comes from what is exactly can be consider as working capital. It does not have to be cash sitting in a bank. On the positive side there is grain on hand, pre-paid expenses, accounts receivable or anything else easily converted to cash. Not sure anyone advocates sitting on years worth of cash. Even a growing crop or to be grown crop can be considered on the positive side of working capital.
For the farm in the post below that only has the variable cost to raise a crop(no land, equipment, or other intermediate payments) their working capital position is extremely positive even without cash on hand. In that situation they would have all of the crop proceeds as positive working capital balanced out only by those variable costs to raise the crop (fert, seed, fuel). This should put them in an extremely positive working capital position despite having no cash. | |
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Pknoeber and other bankers- working capital from down below
