Answer Posted / lokesh bhamu
working capital is capital required for day to day operation of a firm including daily wages, short term needs, other expenses and current liabilities. working capital amount depend on cash cycle. shorter the cash cycle lesser working capital required as same capital can rotated. higher working capital compared to industry average indicates that large amount of assets invested as current assets and may not be beneficial for firm.
it is deference of current assets and current liability but some time it consider only amount invested in current assets(gross working capital).
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