The 4 main components of working capital are as follows:- 1 – Trade Receivables Trade receivables are the amount owed to a business by its customers followed by the sale of goods or services on credit which is also known as accounts receivable, trade receivables are classified as current assets on the balance sheet.  2 – Inventory Inventory is another significant part of current assets, which forms an integral component of working capital management. Inventory Management is essential since it is responsible for proper control over inventory right from the raw material stage to the finished goods stage. 3 – Cash and Bank Balances Business efficiency is determined by the amount of free cash flow to the firm (FCFF) which it generates. Proper utilization of cash ensures businesses garner trade discounts and improve the cash conversion cycle, which is a critical yardstick to analyze the working capital cycle of any business. 4 – Trade Payables Trade Payables are the amount which the business has to pay for credit purchases made by it. A good payables management policy goes a long way in ensuring timely payment and cordial business relations with vendors and creditors.