Working capital means that the funds available to an enterprises for conducting its day-to-day operations. Working capital is represented by the excess of current assets over current liabilities including short term loans.
It is very important to note that a business firm must keep a reasonable working capital to run the business activities in a smooth way. The business firm must ensure that the sufficient funds are available to meet the current liabilities. That is why the working capital is calculated. Some time what happens is that the working capital is much more than requirement of the firm. In that case the surplus funds may be invested in some sort term investments to earn some benefits and the money also will not be lying idle.
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