Working capital is a measure of a company's liquidity and efficiency. It is calculated by subtracting a company's current liabilities from its current assets. Current assets include cash, accounts receivable, and inventory, while current liabilities include accounts payable, short-term debt, and other obligations that are due within a year. A company with a positive working capital is able to meet its short-term obligations, while a company with a negative working capital may have difficulty paying its bills in the short term. Therefore, a healthy level of working capital is important for a company's ongoing operations and its ability to invest and grow.
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