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working capital

the funds available for a company's day-to-day operations

In Banking & Finance

In more detail

1. (noun) the money and other assets a company has available to use for its day-to-day operations and short-term expenses

2. (noun) the difference between a company's current assets and current liabilities

Examples

• 1. The company needs more working capital to pay its suppliers and employees.
• 2. Strong working capital is essential for a business to survive economic downturns.

How to use working capital

Working capital is a key financial metric used by accountants, investors, and business managers to assess a company's operational liquidity and financial health. It specifically measures the money available for immediate operational needs rather than long-term investments or fixed assets. The term is used in both formal financial reporting and day-to-day business discussions.

Register: formal

Common phrases

• working capital requirements
• working capital management
• adequate working capital
• short-term working capital
• manage working capital

Synonyms

liquid assets · operating capital · circulating capital · current capital

A common mistake

Learners sometimes confuse working capital with total capital or assets; remember it refers specifically to current assets minus current liabilities, not the company's overall wealth.

Nearby in Banking & Finance

sovereign debt, tranche, underlying, write-down

Keep going

How to remember the words you read · Spaced repetition, explained