BNET Business Dictionary
Business Definition for: Working Capital
- the funds that are readily available to operate a business.
Example: Working capital comprises the total net current assets of a business minus its liabilities.Current assets – current liabilitiesCurrent assets are cash and assets that can be converted to cash within one year or a normal operating cycle; current liabilities are monies owed that are due within one year.
If a company's current assets total $300,000 and its current liabilities total $160,000, its working capital is:$300,000 – $160,000 = $140,000
Additional Resources
- Working Capital Analysis
- Take stock of your working capital to make sure your business can meet its financial needs. Working capital is one of the most difficult financial concepts to understand for the small-business owner. In fact, the term means a lot of different things to a lot of different people. By definition,...
- White papers 2008-01-01
- Working Capital: How Is It Working For Your Business?
- Unfortunately, few multiple-unit franchisees or managers fully understand working capital, how important it is for every business, how it is measured, or how to obtain needed working capital. To many business owners and managers, working capital is simply the cash they have on hand to pay their bills. Others understand...
- White papers 2007-12-14
- An Analysis of Working Capital Management Results Across Industries
- By minimizing the amount of funds tied up in current assets, firms are able to reduce financing costs and/or increase the funds available for expansion. By using the CFO Magazine's annual Working Capital Management Survey, one provides insights into the performance of surveyed firms across key components of working capital...
- White papers
- Working Capital One Of The Many Programs Fueling Growth
- Working capital refers to the amount of assets available for use towards the acquisition of additional assets. It is used to gauge a company's financial health, and whether it can operate at an efficient manner. The working capital can be computed by using this formula: Working Capital = Current Assets...
- White papers 2008-01-01
- Working Capital Loans
- Working capital loans are short-term loans meant to increase a small business' working capital which can then be used to fund daily operation or growth initiatives. Though this product sounds good, the truth is that most working capital loans are extremely hard to obtain. The banks and lending institutions that...
- White papers 2008-01-01
- Understanding Of Working Capital
- Working capital may be regarded as the life blood of business. Working capital is of major importance to internal and external analysis because of its close relationship with the current day-to-day operations of a business. Any change in the working capital will have an effect on a business's cash flows....
- White papers 2008-01-01
- The Importance Of Working Capital
- Many organisations that are profitable on paper are forced to cease trading due to an inability to meet short-term debts when they fall due. In order to remain in business it is essential that an organisation successfully manages its working capital. Too often however, this is an area which is...
- White papers 2000-03-01
- What 80% of Businesses Don't Know: Tips for Improving Your Working Capital Management
- The number one way to prevent business failure is to properly manage the working capital. Working capital management is a critical management issue for growing businesses or medical practices. By adopting a few working capital management strategies, a person can make his or her assets work, without becoming beholden to...
- White papers
- Working Capital Needs
- Your working capital is used to pay short-term obligations such as your accounts payable and buying inventory. If your working capital dips too low, you risk running out of cash. Even very profitable businesses can run into trouble if they lose the ability to meet their short-term obligations. This tool...
- Tools & templates 2008-01-01
- Working Capital Necessary For Every Business
- Working capital is the amount of capital required to carry on a business. It can be a problem for businesses to obtain the necessary working capital, especially when they are starting up, and that is why it is so important for businesses to know all that they can about obtaining...
- White papers 2008-01-01
- Keys to Successful Working Capital Management
- From the perspective of the Chief Financial Officer, the concept of working capital management is relatively straightforward: to ensure that the organization is able to fund the difference between short-term assets and short-term liabilities. In practice, though, working capital management has become the Achilles' heel of scores of finance organizations,...
- White papers 2005-07-01
- Working Out Working Capital
- With all the focus on items like dividend yields, PE ratios and other shorthand ways of assessing the value of company, what's happening to a company's working capital position is sometimes forgotten. But working capital is often where the stresses and strains on a company show up first. So it's...
- White papers 2008-03-17
- 5 Myths About Improving Working Capital Performance
- Improving working capital performance enhances a company's competitiveness by increasing its Return On Invested Capital ROIC. However, generating cash through working capital improvement is often easier said than done. The path to working capital improvement is beset with a number of myths. They are not labeled as such but generally...
- White papers 2005-10-01
- Working Capital Loans Keeping Business Owners In Business
- Working capital represents the amount of assets that a company can utilize. It is essential to have a positive working capital to ensure the operational efficiency of a company. It is used to acquire additional assets, such as inventory products to be used in the business. Working capital can be...
- White papers 2008-01-01
- Working Capital Management
- Working capital management involves the relationship between a firm's short-term assets and its short-term liabilities. The goal of working capital management is to ensure that a firm is able to continue its operations and that it has sufficient ability to satisfy both maturing short-term debt and upcoming operational expenses. The...
- White papers 2003-01-01
- Taking Care Of Your Own Finances: Working Capital Loan
- A working capital loan is a short term business loan that are commonly used to help sustain businesses that are experiencing cash flow problems. Working capital loans are extremely useful in certain situations, and this paper will explain how they work and what to look for when considering this type...
- White papers 2008-01-01
- Forget The Float? The 2001 Working Capital Survey
- In a tough operating environment, negative working capital isn't always a plus.” Working capital efficiency can be a beautiful thing, as any finance executive familiar with the Working Capital as per the survey. The idea, of the survey is if you minimize your working capital — that is, the amount...
- White papers 2001-07-01
- The Big Squeeze
- From the executive summary: ‘The trickiest challenge of any working capital crackdown, is engaging not only finance, but also other parts of a firm. The problem with working capital management is that it is fairly fragmented, in terms of responsibility across an organization. The overriding aim of all the measures...
- White papers 2003-08-01
- Conserving Working Capital Utilizing Equipment Financing
- The need for additional capital may come as a result of seizing new market opportunities or from production or development problems. Companies are well advised to err on the conservative side when securing and or preserving capital. Article suggests that the prudent entrepreneur must be focused on conserving the company’s...
- White papers 2002-01-01
- Working Capital: The Essential Component For A Successful Business
- Not all business owners understand how important is to maintain a constant cash flow, but most financial managers know that this is the key element for any successful business ownership, and this should also be your top priority as an experienced business owner. Making sure that your business can keep...
- White papers 2008-01-01
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