Accounting Working Capital is a key indicator of a company’s financial health and operational efficiency. It is the amount of a company’s current assets available to fund short-term operations and obligations. Simply put, it is money available to cover all the costs associated with running a business over a given period of time. It is calculated by subtracting current liabilities from current assets, and should remain positive in order for a business to remain healthy. For example, if a business has $100 in cash, but owes creditors $90, its Accounting Working Capital is only $10. By monitoring and managing this figure, businesses can maintain their operational efficiency and keep their cash flow healthy.
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