Which term refers to funds needed for everyday costs such as wages and raw materials?

Which term refers to funds needed for everyday costs such as wages and raw materials?

• A. Working capital
• B. Investment capital
• C. Asset management function
• D. The financial system

Answer: (A)

Funds needed for everyday costs like wages and raw materials are the business’s working capital—the liquidity that keeps daily operations running. Working capital is the cash and other current assets a company can readily convert to cash, balanced against its short-term obligations, so the business can pay suppliers, employees, and cover other routine expenses without disruption. Long-term investment capital funds growth projects, the asset management function focuses on handling assets, and the financial system is the network for moving funds between parties.

Funds needed for everyday costs like wages and raw materials are the business’s working capital—the liquidity that keeps daily operations running. Working capital is the cash and other current assets a company can readily convert to cash, balanced against its short-term obligations, so the business can pay suppliers, employees, and cover other routine expenses without disruption. Long-term investment capital funds growth projects, the asset management function focuses on handling assets, and the financial system is the network for moving funds between parties.