Working Capital

Business

WHAT IS IT?

Working capital generally refers to the short-term resources available to a business to support its day-to-day operations, often considered in relation to current assets and current liabilities.

IN PLAIN ENGLISH

It is the financial breathing space needed to keep trading while money moves through the business.

SIMPLE EXAMPLE

A business may need to pay suppliers and staff before customers pay invoices. Working capital helps bridge that timing gap.

WHY DOES IT MATTER

A business can be profitable but still experience pressure if it does not have enough short-term cash resources.

THE ROCKET TEST

Working capital is part of the financial breathing space that keeps day-to-day trading moving.