Answer:-
Working capital analysis evaluates a company’s short-term financial health by examining its ability to cover daily expenses and liabilities. It’s calculated as: Working Capital = Current Assets – Current Liabilities A positive working capital means a business can meet short-term obligations, while a negative one signals potential financial struggles. Key ratios like the current ratio and quick ratio help assess liquidity and efficiency. This analysis ensures smooth operations, preventing cash flow issues that could impact growth. Businesses monitor working capital to maintain stability, invest wisely, and avoid unnecessary financial risks.
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