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It exists so as to be able to keep the business running.
For example, manufacturing businesses need to keep a level of inventory in order to keep the business running. All companies that sell on credit will automatically have a certain level of receivables.
These are both part of working capital – they use cash to buy inventory, they sell the inventory and then have receivables.The job of the financial manager is to make sure that the level of working capital is kept to the minimum without harming the smooth running of the business.
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