Working capital
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- Working capital measures a company's liquidity and short-term financial health, calculated as the difference between its current assets and current liabilities. Current assets include cash, accounts receivable, and inventory, while current liabilities include accounts payable, short-term debt, and accrued expenses. Working capital represents the amount of funds available to cover day-to-day operational expenses and short-term obligations. Positive working capital indicates that a company has sufficient liquidity to meet its short-term obligations, while negative working capital may indicate financial distress or liquidity problems.
