Investing Dictionary
Company Health

What is Working Capital?

A company's short-term financial cushion

Full Explanation

Working capital = current assets − current liabilities. It shows whether a company can cover its short-term bills. Positive = fine. Negative = potential cash crunch ahead.

Pro Tip

Companies can be profitable on paper but still run out of cash. Working capital reveals this.

Related Company Health Terms

Profit Margin

What percentage of revenue becomes actual profit

Return on Equity

How efficiently a company uses shareholder money to make profit

Debt-to-Equity

How much a company borrowed vs. what it actually owns

Price-to-Sales (P/S)

How much investors pay for each dollar of a company's revenue

View all Company Health terms →

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