Which of the following best describes working capital?

• A. Long-term financing for growth
• B. Financing fixed assets
• C. Financing international expansion
• D. Short-term finance for day-to-day running of the business

Answer: (D)

Working capital is the money a business uses to run daily operations. It focuses on short-term liquidity—the cash and other current assets available to cover everyday expenses like paying suppliers and wages, and the short-term obligations that must be met soon. It’s typically understood as current assets minus current liabilities, which shows how much a business can fund its day-to-day needs without securing long-term finance. The best description here is short-term finance for day-to-day running of the business because it captures that immediate, operational cash flow focus. The other options describe longer-term financing for growth, or funds tied up in fixed assets or international expansion, which are not what working capital covers.