what exactly is working capital?
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To put it simply it’s basically how much actual money you have in cash to pay for stuff right now.
Business can be worth a lot of money on paper, but they also have a lot of their worth tied up in large investments and assets like buildings, tools, cars, inventory, etc. And that is great, but if you have bills to pay then you can’t just give them some of all the hammers you have in stock. They are going to want money.
For example: Amazon is worth several billions, but a lot of that is the value of all their warehouses and their fleet of trucks etc. and you can’t pay a bill by giving away parts of a truck. So when they need to pay for stuff they need actual money right here, right now. And the money they have on hand is their woking capital.
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