Working capital breakdown is a key measure for companies to understand their financial health and stability. It measures the difference between current assets and short-term liabilities of a business. Current assets such as cash, inventory, accounts receivable, and prepaid expenses are used in this calculation. Short-term liabilities are usually expected to be paid within 12 months, such as accounts payable, taxes payable, payroll obligations, and other short-term debts. By measuring the working capital breakdown ratio, businesses can assess their ability to cover short-term debt and invest in new opportunities. Moreover, it can also serve as an indicator of company efficiency and liquidity. Tracking changes in working capital over time provides valuable insight into a company’s performance and allows managers to make better decisions.