The Cost of Working Capital (CWC) is the total cost of financing a business’s short-term assets, such as inventory and accounts receivables. It includes both the interest paid to lenders on borrowed money and the profit your company sacrifices by tying up funds in current assets. CWC indicates how much it costs to maintain a company’s operational activities over a given period of time. In other words, it captures the cost of resources necessary to keep business operations running smoothly. Companies can use this information to compare different sources of short-term financing to ensure they are making the most cost-effective financial decisions.