Accounting glossary
What is working capital?
Current assets minus current liabilities — the cushion funding day-to-day operations. Positive working capital means the next year is financed; shrinking working capital is the earliest quiet warning most businesses get.
Example
Current assets of $131,000 less current liabilities of $60,000 gives $71,000 of working capital — the cushion funding the next twelve months of trading.
Growth consumes working capital: more sales means more stock and more receivables before any of it becomes cash.
In SeroBooks
Both sides live on the Balance Sheet, current the moment you open it. Financial statements →
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