The difference between current assets and current liabilities is
Answer Details
The difference between current assets and current liabilities is known as working capital. Current assets are those assets that can be easily converted into cash within a year or less, such as cash, inventory, and accounts receivable. Current liabilities, on the other hand, are obligations that are due within a year or less, such as accounts payable and short-term loans.
Working capital is important because it represents the amount of funds available to a business to meet its day-to-day operational needs. It is the amount of money that a business can use to pay for its short-term liabilities, such as bills and expenses, without having to sell off its long-term assets or take out more loans. A positive working capital balance is generally considered healthy for a business as it shows that the business has enough funds to cover its short-term debts.