Working capital is an indicator of a company’s financial health and is measured as the difference between current assets and current liabilities. Current assets refer to any assets that are either cash or can be converted into cash within a year, such as accounts receivable, inventory, and other marketable securities. Current liabilities, meanwhile, are all debts and obligations that must be paid within a year, such as accounts payable, accrued expenses, taxes due, and short-term debt. When current assets exceed current liabilities, it means that a company has positive working capital and is in good financial shape. On the other hand, if current liabilities exceed current assets, then the company may be having problems generating enough cash to meet its current obligations.