Working capital is a business term used to describe the amount of cash and liquid assets that are available to meet short-term obligations. It’s calculated by taking the current assets of a company minus its current liabilities, and is important for ensuring that a business has enough liquidity to cover unexpected expenses. The current ratio is a financial metric used to measure a company’s ability to pay its short-term debts. It’s calculated by dividing a company’s current assets divided by its current liabilities, and is one way to evaluate a company’s financial health. Put simply, a higher current ratio means that a company can more easily meet its short-term debt requirements and remain solvent.