Working Capital

Definition

Working capital is the difference between a business's current assets (cash, accounts receivable, inventory) and current liabilities (accounts payable, short-term debt, accrued expenses). Positive working capital means a business has enough liquid assets to cover its short-term obligations and fund day-to-day operations. Negative working capital indicates potential cash flow problems. Working capital funding products — including lines of credit, MCAs, and term loans — provide businesses with the liquidity needed to manage payroll, purchase inventory, cover seasonal dips, or take advantage of growth opportunities without depleting cash reserves.

Example