What does working capital means

Question

Accepted Answer

Working capital refers to the funds available for a company's day-to-day operations and is calculated by subtracting current liabilities from current assets.

Working capital is the measure of a company's liquidity and ability to meet short-term obligations.
It represents the difference between a company's current assets (such as cash, inventory, accounts receivable) and its current liabilities (such as accounts payable, short-term debt).
Positive working capital indicates that a company has enough assets to cover its short-term liabilities, while negative working capital suggests a potential liquidity problem.
It is important for businesses to maintain an optimal level of working capital to ensure smooth operations and financial stability.
For example, if a company has $500,000 in current assets and $300,000 in current liabilities, its working capital would be $200,000.

Accepted Answer

Working capital is the amount is required to financing the day to day operations of organisations .In accounting term it is the difference between current assets and current liabilities.

What does working capital means

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