Working capital on a balance sheet is an estimate of a business’s short-term financial strength. It’s calculated by subtracting current liabilities from current assets, with both values found on the balance sheet. A positive working capital means that your business has enough liquidity to cover its immediate expenses. This is important for businesses to ensure they have sufficient funds to keep operations running smoothly. On the flip side, if working capital is negative, then it can be a warning sign that there could be some cash flow issues in the future. Make sure you take note of your working capital, as it’s one of the most important metrics when assessing a business’s financial health.