Working capital formulas measure the solvency of a business, determining the ability to meet short-term financial obligations. They are often expressed as ratios or percentages, and can be calculated by taking current assets minus current liabilities, divided by total sales over a given period. The resulting number indicates whether the business has enough liquid resources to efficiently operate and grow. A positive working capital number indicates an adequate level of liquidity, while a negative result shows that the company is operating with insufficient funds. Understanding these ratios can help business owners make informed decisions about their finances, allowing for both short-term success and long-term growth.