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It is the financial stability of the company in the short term does not include what is cyclical but everything is operating.
A current asset is something you own and that you can sell within one year for a profit. Here is an example: Say you own a greenhouse, and you currently have300 bedding plants that you can sell for $3 each. those bedding plants are a current asset because you can sell those plants and make a profit of of them within a year. Now, a current liability is something that you owe someone and that has to be paid of within a year. Ok lets go back to that greenhouse Situation: So you own that same greenhouse, and you take out a small loan of X amount of dollars on January2nd. The bank tells you that you must have this paid off by January2nd of next year. This would be a current liability
Current assets, represents a short term instruments like bank balances, stocks in hand, debtors, having high liquidity to convert to cash and current liabilities represents short terms loans/overdrafs, creditors with short terms liabilities.
Working capital is the difference between CA & CL. You have + Working capital when CA is larger than CL. If CL is larger than CA then you or your company runnung with cash flow irregularity
I known as working capital which represents operating liquidity available to business. Positive working capital is required to make sure that a company is capable to carry on its business and has adequate funds to satisfy both maturing short-term debt and future operational expenses.
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