Working capital is a measure of a company’s financial strength.
It is calculated by subtracting current liabilities from current assets.
Cash Management, Receivables Management, Inventory Management and Accounts Payable Management are the four main components of working capital.
One of the advantages of working capital is more flexibility.
This enables companies to satisfy their customers’ orders, expand their business, and invest in new products and services.
It also provides a cushion for when a company needs a bit of extra cash.
