Working capital is the lifeblood of any business as it allows companies to pay for essential resources such as employees, materials and machinery. The calculation of working capital is an important metric used to assess a company’s financial health. It shows how much money a company has available to cover its short-term debts and other commitments. To calculate it, one simply subtracts current liabilities from current assets. A positive result suggests that the company has sufficient funds to cover its ongoing expenses; if the figure is negative, then the business may need to seek additional sources of funding in order to stay afloat.