Which concept covers the funds available to carry out daily operations and emergencies?

• A. Contingency fund
• B. Character
• C. IPO
• D. Working capital

Answer: (D)

Working capital is the pool of resources a business uses to manage its everyday operations and to handle small, unexpected cash needs. It’s basically the cash and near-cash assets available to pay for daily expenses—like paying suppliers, payroll, and inventory—after settling short-term obligations. In practical terms, it’s current assets minus current liabilities, showing how much liquidity the firm has to keep running smoothly and to weather minor emergencies without needing new financing.

A contingency fund is money set aside for unusual or extraordinary events, not the ongoing funds used for daily operations. An IPO is a process to raise capital by selling shares to the public and doesn’t describe the money available for day-to-day use. Character refers to a borrower’s creditworthiness or reputation, not a pool of funds.