One of the main advantages of looking at the working capital position is being able to foresee any financial difficulties that may arise. It reveals more about the financial condition of a business than almost any other calculation. It tells what would be left if a company raised all of its short term resources, and used them to pay off its short term liabilities. The more working capital, the less financial strain a company experiences. By studying a company's working capital, you can clearly see if it has the resources necessary to expand internally or if it will have to turn to a bank and take on debt. Good management of working capital will generate cash, will help improve profits and reduce risks.