Working capital is an organizational financial metric that measures a company’s ability to cover its short-term operating expenses. In other words, it’s the capital available to meet the needs of day-to-day operations. It’s a measure of financial health, and can be used to assess a company’s liquidity and risk tolerance. Working capital is calculated by subtracting current liabilities from current assets. A positive working capital means that the company is in a good financial position, while negative working capital indicates potential cash flow issues. By monitoring their working capital, businesses can ensure that their short-term financial obligations are being met and that they are able to maintain consistent daily operations.