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What is a Working capital?

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What is a Working capital?


Working capital represents non-cash current assets less its current liabilities.


Current assets are all assets which can be converted into cash within a year. Current liabilities on the other hand are obligations that need to be paid within the next 12 months. Working capital is an important indicator of the company’s ability to cover its day to day operations.


Current Assets include accounts receivable, inventory and other current assets. Current liabilities include accounts payable, accrued expenses and other non-debt current liabilities.




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