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Can you please let me know what is the main reason for setting a correct level of working capital? Working capital is the inventory and

Can you please let me know what is the main reason for setting a correct level of working capital?

Working capital is the inventory and accounts receivable of a business. My study material states that it is important the working capital is at a minimum level to meet business opportunities and generate cash. My understanding is if a business keep their working capital at a minimum level, then accounts receivable and inventories amount is low but the business cash flow is good.

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