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Working capital management involves the relationship between a firm's short-term assets and its short-term liabilities. The goal of working capital management is to ensure that a firm is able to continue its operations and that it has sufficient ability to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable and payable and cash. A business’s working capital is equivalent to the amount of cash it can deploy very rapidly, as such even very profitable businesses can have working capital problems, in particular, this can develop because of long dated payments from clients. It plays an important role in firm’s growth and profitability and is solely interlinked with the concept of liquidity.
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