Series 79: 3.1.1. Working Capital

3.1.1. Working Capital

Working capital is another important measure of liquidity. Working capital is the amount of money a company has available to fund its operations and build its business. Working capital is calculated as follows:

working capital = current assets – current liabilities

Recall from Chapter 1’s discussion of balance sheets that current assets are assets that are likely to be converted into or exchanged for cash within 12 months. Likewise, current liabilities are obligations the compan