How to interpretE a negative Working Capital ?

If Permanent capital < Net Fixed assets, that means that a part of fixed assets is financed by short term debts.

However, What is important

• is not the level of WC as such
• but its relation with the WCR

A company with a high WC might be in financial difficulties if its WCR are even higher.

On the other hand, a firm with a tiny WC (or even a negative one) might be in a good financial position if its WCR are even smaller (or more negative) than its WC.

Sources :

Understranding Financial Statements, 1999, Marc Bertonèche, Ph. D. in Finance from the Northwestern University, Professor at the Bordeaux University and at Sciences-PO Paris, Visiting Professor at Harvard Business School and Oxford University.

(c) ECOFINE.COM, Bernard Jaquier, Professor in Economics & Finance, Switzerland, 2018