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Working Capital

Working capital (WC) is a financial metric that indicates the operating liquidity available to a business, calculated as current assets minus current liabilities. Positive working capital is essential for a company to maintain operations and meet short-term financial obligations. Effective management of working capital involves overseeing inventories, accounts receivable and payable, and cash flow.

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15 views1 page

Working Capital

Working capital (WC) is a financial metric that indicates the operating liquidity available to a business, calculated as current assets minus current liabilities. Positive working capital is essential for a company to maintain operations and meet short-term financial obligations. Effective management of working capital involves overseeing inventories, accounts receivable and payable, and cash flow.

Uploaded by

Abhijeet Singare
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Working capital

Working capital (abbreviated WC) is a financial metric which represents operating liquidity available to a business,
organization, or other entity, including governmental entities. Along with fixed assets such as plant and
equipment, working capital is considered a part of operating capital. Gross working capital is equal to current
assets. Working capital is calculated as current assets minus current liabilities.[1] If current assets are less than
current liabilities, an entity has a working capital deficiency, also called a working capital deficit and Negative
Working capital.

A company can be endowed with assets and profitability but may fall short of liquidity if its assets cannot be
readily converted into cash. Positive working capital is required to ensure that a firm is able to continue its
operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational
expenses. The management of working capital involves managing inventories, accounts receivable and payable,
and cash.

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