Avoiding insufficient capital is a critical aspect of financial planning. Insufficient capital refers to a situation where a company or individual does not have enough financial resources to meet its obligations or pursue growth opportunities.
Maintaining adequate capital is vital for several reasons. Firstly, it provides a buffer against unexpected expenses or downturns in the economy. Secondly, it allows companies to invest in new projects and expand their operations. Thirdly, it enhances a company’s creditworthiness, making it easier to secure financing at favorable terms.