what is working capital?
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Working capital refers to the difference between a company’s current assets (such as cash, inventory, and accounts receivable) and its current liabilities (such as accounts payable and short-term debt). It represents the amount of capital available for day-to-day operations and is an indicator of a company’s short-term liquidity and financial health. Positive working capital means the company has enough current assets to cover its current liabilities, while negative working capital indicates a potential liquidity issue. It’s like the financial cushion a company has to manage its daily operations and meet its short-term obligations.