Asked by DELINA FILLI on Jun 25, 2024
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Working capital is a measure of short-run liquidity and is measured by dividing current assets by current liabilities.
Working Capital
The measure of a company's short-term liquidity, determined by subtracting current liabilities from current assets.
Short-Run Liquidity
The ability of a company to meet its short-term financial obligations and operate in the near future without facing financial distress.
Current Assets
Assets that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of the business.
- Gain an understanding of the function of working capital and why it is crucial for immediate financial liquidity.
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Learning Objectives
- Gain an understanding of the function of working capital and why it is crucial for immediate financial liquidity.
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