Describe the concept of "working capital."

The concept of "working capital" refers specifically to the difference between current assets and current liabilities. It is a crucial indicator of a company's liquidity, as it measures the short-term financial health of an organization. Working capital reflects the funds available to cover everyday operations and obligations. Positive working capital implies that a business has enough assets to cover its liabilities and can thus sustain its operations without financial strain. This is an essential metric for assessing whether a company can meet its short-term debts and continue functioning effectively.

In contrast, the other choices do not accurately capture the essence of working capital. While total assets owned measure the overall asset base, they do not focus solely on the operational liquidity aspect. Long-term financing relates to resources allocated for extended periods and thus is not directly tied to day-to-day operating needs. Lastly, investment in fixed assets refers to capital tied up in long-term physical assets and does not involve the immediate cash flow and operating liquidity assessed by working capital. Thus, understanding working capital is vital for financial management and planning as it highlights the current financial position in relation to short-term operational needs.