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Net Working Capital Is Often Thought of as the Balance

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Net working capital is often thought of as the balance of completely liquid assets and liabilities.However, this is not completely true.Please explain why parts of working capital can become stagnant and hurt cash levels, even if a firm is growing and profitable.


Definitions:

Strip Mall

A retail location consisting of a cluster of neighborhood stores to serve people who are within a 5- to 10-minute drive.

Central Business District

The oldest retail setting, usually located in the community’s downtown area.

Old-Town District

An area within a city known for its historical architecture and often sought after for cultural, tourism, and commercial activities.

Outlet Stores

Retail establishments that sell products directly from manufacturers at reduced prices.

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