Working Capital
Current assets minus current liabilities; funds for day-to-day operations.
Formula
Working Capital = Current Assets − Current Liabilities
Real World
During the 2020 lockdown, café chain Pret a Manger saw working capital collapse as cash receipts dried up while rent and supplier liabilities remained — forcing an emergency £100m bank facility.
Exam Focus
For 'evaluate' questions, explain that negative working capital is not always fatal — Amazon runs negative working capital by design.
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