Working capital requirement formula is a numerical representation of the total amount of money that a company needs to have on hand in order to fund its daily operations and meet any upcoming payments that may become due. The formula is simply calculated by subtracting the current liabilities from the current assets, and is expressed as either a dollar figure or as a percentage of the total assets. It is an important tool for businesses in all stages of development, and helps managers understand their cash flow needs. By understanding working capital requirements, businesses can better plan for future financial needs and ensure they remain operational.