Working Capital

Working capital is a financial metric which symbolize operating liquidity available to a business,working capital is calculated by Current assets minus current liabilities,

Working Capital = Current Assets − Current Liabilities

Positive working capital means that the company is able to pay off its short-term liabilities. Negative working capital means that a company presently is not capable to meet its short-term liabilities from its current assets, Changes in working capital will impact a business’ cash flow. When working capital raise, the effect on cash flow is negative,working Capital is the life blood of most small businesses.


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