Working capital is the amount of available money you have to run your business.
It’s calculated by deducting your liabilities from your liquid assets (the things you own that are cash or can be converted to cash quickly with little loss of value).
Inventory, property or money owed from your customers isn’t included in your working capital calculation.
Having a good working capital means you can cover your overheads and run your business. It’s a good measure of how well your business is doing.
