Working capital is current assets minus current liabilities, the net short-term financial resources a business has available to fund its day-to-day operations.
Working capital answers a specific question: does the business have enough short-term resources to meet its short-term obligations? A positive working capital balance means current assets, cash, receivables, inventory, exceed current liabilities, payables, accrued expenses, short-term debt. A negative balance means the opposite, which is a liquidity warning regardless of what the income statement indicates.
For lenders, working capital is a primary credit assessment metric. For buyers, it is a deal-structure variable: the working capital peg in a transaction determines how much the seller actually receives after adjusting for the working capital delivered at closing. Understanding the working capital position is not just an accounting exercise. It is a negotiating position.
See also: Working Capital Management · Working Capital Ratio · Cash Conversion CycleWorking capital is both a financial health indicator and a transaction variable. See how Wefinx approaches Virtual CFO services.