Bookkeeping

Working capital

Working capital is current assets minus current liabilities. It measures the cash and near-cash resources a business has to fund its day-to-day operations.

Reviewed November 3, 2026

Why it matters

A growing business can be profitable and still short of working capital if receivables and inventory grow faster than payables. Lenders look at working capital before a loan.

Example

A business has $80,000 of current assets and $50,000 of current liabilities. Working capital is $30,000.

Related terms

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Sources

Checked November 3, 2026. Public pages and tax rules change; confirm them before relying on them.

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