What is the importance of working capital?

Working capital is very important concept in finance. Working capital represents the funds available with the company for day to day operations. working capital finances the cash conversion cycle. company cannot survive with negative working capital which represents that the company has no funds for day to day operations Essentially working capital is the answer to the question: "How much short term funding do you need to operate this business?". Short term funding is important because, with long term funding already in place, the business still needs short term funding to operate. Without the short term funding, the business will go bankrupt.

Another concept is net working capital which means surpuls of current assets over current liablities. a positive NWC is good for a company