What is Working Capital?

A definition of Working Capital

“Working capital is a financial metric that represents the difference between a company’s current assets and current liabilities. It indicates a company’s short-term liquidity and operational efficiency.”

Working Capital in Business Glossary - What is Working Capital?

Business Glossary > What is Working Capital?


Examples of Working Capital in a Sentence:

The company improved its working capital by reducing inventory costs.

Our financial analyst assessed the working capital needs for the next quarter.

A positive working capital suggests that the company can meet its short-term obligations.

Why is Working Capital Important in Business?

Understanding working capital is crucial for managing the day-to-day financial operations of a business. It helps in assessing the company’s efficiency in using its resources and indicates its ability to meet short-term financial obligations and operational needs.

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Associated Terms

Here are some associated business terms and synonyms for “Working Capital”:

  • Current Capital
  • Net Working Capital
  • Operating Liquidity

Amazon Working Capital

Amazon manages its working capital effectively by optimizing its inventory turnover and maintaining efficient payment cycles with suppliers, ensuring they have enough liquidity to support rapid business growth and seasonal demand fluctuations.

Final Notes on Working Capital

Monitoring working capital is vital for understanding a company’s financial health. Businesses should pay attention to efficient inventory management, quick receivables collection, and timely payment of liabilities to maintain adequate working capital levels.


This has been a definition of Working Capital meaning.

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