What does negative working capital suggest about a company?

Negative working capital indicates that a company's current liabilities exceed its current assets. This situation implies that the firm may face challenges in meeting its short-term financial obligations, such as paying off debts, creditors, and operational expenses. When a company's current liabilities are greater than its current assets, it suggests a liquidity issue, as there may not be enough readily available resources to cover immediate financial commitments.

In contrast, the other options do not accurately reflect the implications of negative working capital. Suggesting a company is on the verge of significant growth would generally require positive working capital, reflecting that it can fund its operations and invest in growth opportunities. Claiming that a company has a strong financial position or that its assets are high compared to liabilities also contradicts the reality of negative working capital, which indicates financial strain rather than stability or profitability.