What is Working Capital in Retail? Explained

Working capital in the retail sector represents the financial difference between a company's current assets, such as cash and inventory, and its current liabilities, including accounts payable. It serves as a key indicator of a business's operational liquidity and ability to meet short-term financial obligations. For retailers, maintaining a healthy working capital is vital for managing day-to-day operations, stocking inventory, and fulfilling immediate financial responsibilities. Efficient working capital management is essential to ensure ongoing liquidity, support business growth, and sustain profitability.