InvestorQ : What is working capital?
Rohit Lad made post

What is working capital?

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Aswini Chikkodi answered.
1 year ago

Working capital is the financial term used to indicate the sum available in the company for day-to-day expenses. It is the capital used to firm's liquidity to meet its short-term obligations. It results in the financial stability of the company.

It can be in the form of cash, inventory, accounts receivable, accounts payable.
Below is the simple formula of Working Capital that helps investors to find if the company holds enough assets to cover its short-term debt:

Working Capital = Current Assets - Current Liabilities