What is Working Capital? Current assets minus current liabilities.

Working capital measures how much in liquid assets a company has available to build its business. The number can be positive or negative, depending on how much debt the company is carrying. In general, companies that have a lot of working capital will be more successful since they can expand and improve their operations. Companies with negative working capital may lackthe funds necessary for growth. also called net current assets or current capital. In accounting and financial statement analysis, working capital is defined as the firms short-term or current assets and current liabilities. From a financing working capital refers to the firms investment in two types of assets. In one instance, working capital means a businesss investment in short-term assets needed to operate over a normal business cycle. This meaning corresponds to the required investment in cash, accounts receivable, inventory, and other items listed as current assets on the firms balance sheet. In this context, working capital financing concerns how a firm finances its current assets. A second broader meaning of working capital is the companys overall nonfixed asset investments Replenishment of Inventory- managers must ensure that adequate inventory levels are maintained to meet customer demand.