Working Capital
Working Capital is the difference between a company`s current assets and current liabilities, indicating the liquidity available to run its operations and manage short-term financial obligations effectively.
Benefits
Working capital shows a company`s operational liquidity by measuring the difference between assets and liabilities.
Frequently Asked Questions
What is the difference between working capital and current assets?
Working capital is the difference between current assets and current liabilities, while current assets are all assets that can be converted to cash within a year.
What is the definition of working capital?
Working capital is the difference between a company`s current assets and current liabilities, used to fund day-to-day operations.
Is working capital a liquidity or efficiency?
Working capital is mainly a measure of liquidity, showing a company`s ability to meet short-term obligations.
Key Takeaway
Working capital reflects a company`s liquidity by calculating the difference between assets and liabilities.