Working Capital

Definition

The difference between current assets and current liabilities. Formula: Current Assets − Current Liabilities. Measures short-term financial health. Positive = you can cover short-term obligations.

Related Terms

Current Ratio

A liquidity ratio measuring whether a company can pay short-term debts with short-term assets. Formula: Current Assets ÷ Current Liabilities. A ratio of 1.5 or higher is generally considered healthy.

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