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Current assets minus current liabilities, used to assess a business's short-term financial position.
A retailer buys inventory, sells it and collects cash while paying suppliers and staff. Cash can be committed to stock or customer receivables before it comes back in. Supplier credit can partly finance that gap. Growing sales can therefore consume cash even when the income statement shows a profit. Reducing collection delays or excessive inventory can release funds, although pushing suppliers too hard can create other problems.
Suppose a business has J$8 million of cash, J$12 million of receivables and J$10 million of inventory, with J$20 million of current liabilities. Current assets are J$30 million and working capital is J$10 million. If customers take longer to pay, the J$12 million of receivables is still recorded, but it may not provide cash in time to meet next week's obligations.
FosRich seeks time from bondholders as restructuring talks continue