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Two companies have the same amount of working capital. The current debt paying ability of one company is weaker . Explain how this could occur?

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Question added by soumya sudheesh
Date Posted: 2016/03/07
Leomar Coetzee
by Leomar Coetzee , Civil Engineering Draughtsman Health & Safety Manager , Betafence SA

The one company could have a steady order acknowledgement book, orders that is definite to come in or a line of clients that buys the same things every year allowing the one company to have a clear view of yearly sales and the ability to pay debt. 

The other company runs on risk to sell, therefore not being able to pay debt until the required sales is made. 

Jon Cedric Jeruta
by Jon Cedric Jeruta , Installation Supervisor , Al Kaffary Group

This issue maybe result of a weak auditing of the company assets in which has a weaker ability of paying buffer debt. as a result it may lose some of its capital and also stagnant growth.

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