Working Capital

Working capital is the difference between a company's current assets and current liabilities. Current assets include cash, inventory, and receivables, representing resources available in the short term. Current liabilities are obligations like bills and loans due soon. Positive working capital indicates a company can cover its short-term expenses and invest in operations, while negative working capital suggests potential liquidity issues. It’s a key measure of financial health, showing how effectively a business manages its resources to maintain smooth operations and meet short-term obligations.