Working Capital

Working capital is the money a company has available right now to pay its bills and keep operations running—basically, current assets (cash, inventory, money owed to it) minus current liabilities (bills due soon, short-term debt). You'll see this number on financial statements, and it matters because it shows whether a company can actually afford to stay in business day-to-day. A healthy working capital means the company isn't scrambling to pay suppliers or employees. For example, if TechCorp Inc. has $500,000 in cash and inventory but only $300,000 in bills due this year, it has $200,000 in working capital—a comfortable cushion. A shrinking working capital can be a red flag that a company is struggling.