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Glossary term

Working Capital

Definition

Working capital is the financial cushion you have to cover near-term bills — your short-term assets minus your short-term debts.

Technical definition

Working capital is current assets minus current liabilities, measuring an operation's short-term liquidity.

Why it matters

Adequate working capital helps a farm weather low prices, late payments, or a bad season without scrambling for cash.

Example

Cash and crops ready to sell minus the bills due this year gives a rough working capital figure.

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