Working capital is an estimate of the money a company has available to meet its short-term financial obligations and maintain daily business operations. Working capital is a measure of a company’s liquidity, short-term financial health, and operating efficiency.
The formula for working capital =
Working Capital = Short-Term Assets – Short-Term Liabilities
Improving working capital can help businesses be better prepared for unexpected changes within the organization along with allowing for more efficient operations and potentially providing room for expansion.