• Business - Finance

    Apply and Understand: Simple Tips for Working Capital Calculation

    Working capital management is a vital aspect of business finance that ensures a company has sufficient liquidity to cover its short-term financial obligations. Understanding the concepts of working capital calculation and net working capital provides clarity into a business’s financial health and can lead to improved profitability. This article will explain these key terms and highlight the benefits of effectively managing working capital. Defining working capital Working capital refers to a company’s current assets minus its current liabilities. Current assets include cash, accounts receivable, inventory, and other assets that can be converted to cash within one year. Current liabilities are…