Q.What is Working Capital?

Alongside the money tied up permanently in assets, a company also needs a continuously circulating pool of funds just to keep its daily operations running — this is its working capital. …

Working capital refers to the funds a company needs for its day-to-day operations — to purchase raw material, pay wages and operating expenses, hold stock of finished goods, extend credit to debtors, and meet other short-term needs. Unlike fixed capital, working capital keeps circulating continuously through the business's operating cycle: cash buys raw material, raw material becomes finished stock, stock is sold to generate debtors or cash, and that cash is used to buy raw material again. Gross working capital is the total investment in current assets; net working capital is current assets minus current liabilities. …

Describing working capital simply as 'cash in hand' — it properly includes ALL current assets (stock and debtors as well as cash), net …