Working Capital

Working capital refers to the amount of capital a company has available to fund its day-to-day operations. It is calculated as the difference between a company's current assets (such as cash, accounts receivable, and inventory) and its current liabilities (such as accounts payable and short-term loans). Working capital is important because it provides a measure of a company's liquidity and its ability to meet its short-term obligations. Companies with a healthy amount of working capital are better able to cover their expenses and invest in growth opportunities.