Working Capital

Working capital measures short-term financial health: current assets (cash, receivables, inventory) minus current liabilities (payables, short-term debt due within a year). Positive working capital means a business can cover its near-term obligations from resources it already has on hand, without needing new financing or a fire sale of assets.

A large positive number isn't automatically good — it can mean cash is sitting idle in slow-moving inventory or uncollected receivables instead of being reinvested in the business. Working capital is best read alongside the cash conversion cycle, which shows how quickly that capital actually turns back into cash rather than just how much of it exists on paper.