Define working capital.

Working capital fundamentally refers to the difference between current assets and current liabilities. This measure reflects a company's short-term financial health and operational efficiency, representing the funds available for day-to-day operations.

Current assets include items such as cash, inventory, and receivables, which are expected to be converted to cash within one year. Current liabilities, on the other hand, encompass obligations that the company must settle within the same timeframe, such as accounts payable and short-term loans.

By subtracting current liabilities from current assets, working capital provides insights into the liquidity position of a company. A positive working capital indicates that a company can cover its short-term obligations and invest in its operations, while a negative working capital may suggest potential financial difficulties.

The other choices do not accurately define working capital as they refer to different financial concepts. The first choice relates to the overall equity of a business, the third discusses cash specifically rather than a broader set of assets and liabilities, and the fourth option refers to current investments, which does not encompass all current assets or liabilities.