Why Are Interest Rates So Important

question 57

Essay

Why are interest rates so important?

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Definitions:

Working Capital

The gap between a firm's current assets and its current liabilities, showcasing the business's short-term financial health and operational effectiveness.

Working Capital Assets

Current assets that are used in the day-to-day operations of a business to fund operations and cover short-term liabilities.

Liabilities

Financial obligations or debts that a company owes to others, which need to be settled over time through the transfer of economic benefits.

Maturity Matching Principle

A financial strategy that involves matching the maturities of assets and liabilities to reduce risk in managing working capital and financing.