Working capital, also known as net working capital (NWC), is a measure of a company's liquidity, operational efficiency and short-term financial health. Working capital definition, the amount of capital needed to carry on a business. more Deferred Credit Definition Working capital is defined as the excess of current assets over current liabilities. Working capital reveals a great deal about the financial condition, … A key part of financial modeling involves forecasting the balance sheet. Net working capital can also be used to estimate the ability of a company to grow quickly. Working capital refers to a specific subset of balance sheet items. It forms a part of the aggregate capital of the business. If it has substantial cash reserves, it may have enough cash to rapidly scale up the business. Typically, firms with an optimum level of working capital indicate efficiency in managing its operations. Working capital is defined as current assets minus current liabilities. Definition: Working capital, also called net working capital, is a liquidity ratio that measures a company’s ability to pay off its current liabilities with its current assets. Working capital can be negative if current liabilities are greater than current assets. Conversely, a tight working capital situation makes it quite unlikely that a business has the financial means to accelerate its rate of growth. The definition of working capital (shown below) is simple: Working capital = Current assets - current liabilities We hope this guide to the working capital formula has been helpful. Working capital, also known as net working capital (NWC), is a measure of a company's liquidity, operational efficiency and short-term financial health. Working capital definition and example. more Current Liabilities Definition Working capital is the difference between a company's current assets and current liabilities. For example, if a company has current assets of $90,000 and its current liabilities are $80,000, the company has working capital of $10,000. Working capital is the amount of cash and other assets a business has available after all its current liabilities are accounted for. See more. Working capital in financial modeling. It is one of six main calculations used to determine short-term liquidity—the ability of a company to pay its bills as they come due.. As a dollar figure, working capital … One of the major reasons behind an investor's desire to analyze a company's balance sheet is that doing so lets them discover the company's working capital or "current position." Now, a business needs working capital to fund its short term obligations. Working capital is calculated by subtracting current liabilities from current assets. Learn more. working capital definition: 1. the money belonging to a company that is immediately available for business use, rather than…. 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