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Working capital is the lifeblood of any business, representing the funds available for day-to-day operations. It's a critical financial metric that indicates a company's short-term liquidity and operational efficiency. Understanding how to manage your working capital effectively is essential for maintaining smooth business functions, meeting obligations, and seizing growth opportunities.

What is Working Capital?

Working capital refers to the money invested in a company's current assets, such as cash on hand, cash in the bank, accounts receivable, and inventory. It's a key indicator of a business's short-term financial health and ability to cover its immediate liabilities.

There are two primary concepts of working capital:

• Gross Working Capital: This is the total amount of funds invested in all current assets.
• Net Working Capital: This represents the excess of current assets over current liabilities. Essentially, it's the