Page 388 - F1 Integrated Workbook STUDENT 2018

Chapter 23

Overtrading

Healthy trading growth typically leads to:

 increased profitability and

 the need to increase investment in non-current assets and working capital.

If the business does not have access to sufficient capital to fund the
increase it is said to be “over trading”. This can cause serious trouble
for the business if it is unable to pay its business payables.

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