Working Capital

What is Working Capital?

Working capital is the difference between a company’s current assets and its current liabilities. It measures the short term liquidity of a business and its ability to cover its upcoming financial obligations.

Why It Matters

• Positive working capital ensures that a company can pay its employees and suppliers on time.

• It provides a buffer for unexpected expenses or temporary downturns in sales.

• Too much working capital might suggest that a company is not using its assets efficiently to generate growth.