Word of the Day Working Capital It is the money available with a company to handle its day-to-day operations and expenses It is calculated by subtracting current liabilities (rent, salaries, raw material dues, etc) from current assets (cash, inventory, and money owed by customers, etc). Working capital = current assets – current liabilities -If the working capital is positive, it means the company has enough resources to pay its short-term costs and continue operating smoothly. -If it is negative, it means the company may struggle to pay its bills and may need to borrow or raise money. It is also known as short-term capital as it gives a better idea of a company’s financial stability and tells how efficiently a company is able to run its business.