What Is Working Capital? Formula, Examples, and Why Every Business Needs It

Net working capital is the difference between current assets, such as cash, inventory, and customer receivables, and current liabilities, including supplier balances and short-term debt. It helps assess a business's ability to fund daily operations and meet upcoming obligations.

Calculate it by subtracting current liabilities from current assets. For example, current assets of 80,000 minus current liabilities of 50,000 equal working capital of 30,000. However, positive working capital does not mean all of that amount is available cash. Try Cash Cloud for free to explore accounting, inventory, and financial reporting tools.