Excerpt from Course in Banking: Lessons X-XI, Corporation Finance It. Will be seen from an examination of these figures that lack of capital heads the list, followed by personal in competence. As a rule, however, it is not lack of permanent capital that causes insolvency, but rather the failure to keep a sufficient percentage of the capital in the shape of quick assets. It may be said, therefore, that the lack of earning power in a corporation may result in inability to meet fixed charges and thus bring about true insolvency; while lack of working capital will produce legal insolvency. Competent accountants lay down the principles that a concern should not permit its accounts payable to exceed 80 per cent. _of its accounts receivable; that its bank loans should be represented for the most part by cash in the bank; and that the finished products on hand should not be offset by any corresponding liability. A corporation begins to lose money as soon as it fails to take advantage of cash discounts from the prompt payment of bills. It is certain that if work ing capital is not available to carry on the business the man ager must depend upon sales and accounts receivable to pay his bills. If. For any reason, debtors fail to pay promptly or sales fall off, he will be unable to meet his own obligations. Unless, therefore, he can make new arrangements with his creditors the concern may be forced into liquidation. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.