It is nothing but companys/firms Current Assets – Current liabilities It indicates the liquidity levels of businesses for managing day-to-day expenses and covers inventory, cash, accounts payable, accounts receivable, and short-term debt. It is an indicator of the short-term financial position of an organisation and is also a measure of its overall efficiency.

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Working capital is a daily necessity for businesses, as they require a regular amount of cash to make routine payments, cover unexpected costs, and purchase basic materials used in the production of goods.