Working capital

Current assets minus current liabilities: the money tied up in running the business day to day. The distributor above carries ₹1,775 crore of current assets against ₹1,005 crore of current liabilities, so ₹770 crore of its funding is locked in the operating cycle.

Growth consumes it. A company growing sales 30% a year usually needs 30% more inventory and carries 30% more receivables, and that increase has to be funded before the profit on those sales is collected. That's how fast-growing companies that are properly profitable run out of cash, and it's one of the commonest ways a good business fails.

Strip out cash and short-term debt for analysis, because neither is operational. What's left is the number that moves with sales.

A falling working capital requirement while sales grow is one of the best signals in fundamental analysis. It usually means the business gained bargaining power.

Growth eats it. Bargaining power returns it.

Funding follows directly, and here working capital stops being an efficiency issue and becomes a solvency one. Money locked in the cycle has to come from somewhere. It comes out of retained profit or a working capital loan, or from suppliers. A company growing 30% a year with a 71-day cycle and no spare cash is borrowing to fund its own growth, and its interest bill rises with its revenue. That's survivable while credit is available, and it's the mechanism by which profitable Indian mid-caps have failed in every tightening cycle.