What is Working Capital?
Working capital is the finance employed in a business which is utilised to carry out it’s normal day to day trading operations. It is the net liquid assets of a business. In a simple business it would be calculated as inventory + accounts receivable – accounts payable representing the funding needed to buy inventory and provide credit to customers reduced by the amount of credit obtained from suppliers.
Learn a new bookkeeping term
Random bookkeeping terms for you to discover.
Link to this page
Click in the box to copy and paste the definition of working-capital link to your site.
About the Author
Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years in all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.