Glossary
What is Working Capital?
Working capital is the difference between a business's current assets, such as cash, receivables and inventory, and its current liabilities, such as accounts payable and short-term debt. It measures the resources available to run day-to-day operations. The term also describes financing used to cover operating expenses like payroll, rent and inventory. Positive working capital suggests a business can meet short-term obligations, while negative working capital can signal cash flow pressure.
Example
A business with $200,000 in current assets and $120,000 in current liabilities has $80,000 in working capital.
Related funding
Working Capital: Keep payroll, inventory and operations moving.
Related terms
Questions about an offer? Your advisor will explain every term.