Concept of working capital

Working capital refers to the difference between a company's current assets and current liabilities, representing the short-term financial health and operational efficiency of a business. It measures the liquidity available to meet day-to-day expenses and obligations. Positive working capital indicates that a company can cover its short-term debts, while negative working capital may signal financial difficulties or cash flow issues. Effective management of working capital is crucial for sustaining business operations and supporting growth.